that, followed by broader reductions in income taxes. the reason for that difference is principally that the money saved by employers or employees in payroll taxes translates into a large amount of incremental in incremental spending. it amounts to a temporary discount on the cost of hiring workers. let me change the subject. we have a revenue neutral tax reform corporate individual. it is a broad base more in the right center. how much growth along those lines? >> a tax code with broader base

and lower rates will spur economic growth. we need to take specific proposals from you back to our models before we can have a quantity of estimate. >> boccieri -- i am concerned. can you estimate how many employers will drop their health care coverage. ? >> we have a model of health- insurance coverage in which employees and employers are trying to obtain coverage at a low cost and also giving weight to the quality of the coverage they receive. the affordable care act encourages employers to provide

courage -- coverage when they would not have. we have a small reduction in the employer response -- employer sponsored insurance coverage. there have been some surveys that say there would be more employer dropping. we are comfortable those estimates make sense. it is an issue where we have been asked to explore the sensitivity of the alternative outcomes. we are working on those estimates. >> is your percentage 5% or

less? can you provide an estimate of 10% or 20%? >> it batters who ends up with or without employer sponsored health care coverage. we have to understand. that will affect the budgetary cost. the money will turn up as additional corporate profits. the overall budgetary effect will depend on become a nation of changes in beckett price and

tax receipts. we are working on that, congressman. >> dr. elmendorf, let me look at revenue from a different perspective. is it fair to say a decrease or an increase in unemployment has decreased revenue going into the federal coffers? >> yes. >> a decrease from 9.1decreaseto 8.6% -- a decrease from 9.1% to 8.6%. what would be the decrease? >> i cannot do that in my head. the people earning money would pay taxes on those earnings. >> i would like to see some

computer printouts. >> i will task my computer with that assignment. >> congressman clyburn made a great point. we are hearing about the history of how we got here. we talked about the late 2011 report. there was a thought 0.2 trillion dollars estimate -- $5.20 trillion estimates. 1/3 of that is iraq and afghanistan. it is about 39% when you add the 6six% of the stimulus.

the rest is interest and amt and the rebate in 2008. it is a great point that the economy is going to drive so much of this. you said you thought increasing taxes at this point would have a negative impact just the spending cuts would happen native impact on growth and jobs. in response to senator boxer, you said lowering the rates and -- baucchus, you talked about lowering the rates. can you speak to that? >> a lower tax rate and a broader base would be good for the economy. broadening the base, if done in

certain ways, can reduce incentives for misallocating capital resources. we can estimate the effects on the economy. we would need to have specific proposals and we would need to spend some time trying to model them. it is a complicated business. >> how long will it take you? >> i will not commit to that offense. if we have proposals from you, we will work on them as fast as we possibly can. we are giving high priority to the work of this committee. >> there is a big distinction, almost obvious, if 98% of america was getting a tax cut and 2% who happen to be the wealthiest people and whose

decisions are different and whose impact on the economy is different, there is a difference in that versus a blanket discussion about the tax cuts. correct? >> yes, sir. >> there is a model that needs to be done for that. the distinction will be telling in a lot of ways. i have great respect for the --mmon reinhart analysis the reinhart analysis. your discussion centers around the public debt. the public debt is 62% of gdp. we have had a number of references to the growth debt.s, -- growth

help us understand how that distinction might play out in our deliberations, particularly with respect to the impact on interest rates. the public debt has more impact on economic judgment. maybe you can educate us on the distinction between them. >> cbo focuses on debt held by the public. we think that is a better measure of the impact of federal borrowing on financial markets today. any snapshot that the government owes would be incomplete without looking at where the fiscal trajectory is going. we combine our current levels with productions of revenues and spending. financial markets deal with the

amount of debt the government is trying to get them to buy. looking at the projections for the future offers a fairly complete picture of the federal budget situation. growth debt includes money held by various government trust funds. it does not measure the amount of debt the private financial system has asked to adopt today. for some programs -- adapt today. the amount of debt held in trust fund, in some cases, does not correspond to future spending. the work that carmen reinhart did viewed as the best measure.

we have discussed this issue with carmen. we do elaborate productions. combining projections with debt held by the public gives you a picture of where this country stands today. >> as part of the fiscal commission, i researched often federal revenue exceeded 20% of gdp in the history of our country. it happened three times in the history of our country. in 2000, they were 20% of gdp. that was due to the threefold increase in capital gains from $40 billion in 1999 to $121

billion in 2000. that is what drove back -- drove that. in the 11th fiscal year since 1940, we have had surplus revenues. for seven of those years, they were less than 90% of gdp. i have a letter that outlines all of this that i would like to submit for the record. i think it is important to point out that during the 12 years in which the budget was in surplus , outlays never exceeded 19.4% of gdp. it is important to keep those revenue levels in historical perspective. without objection, i would like

to submit that letter for the record. >> madam chairman, the last time federal spending was low was 1967. we made a commitment to provide health security for seniors. dr. elmendorf, you made a good point in your testimony. your testimony was clear. he cannot address the deficit challenge without modernizing up security programs unless you have large increases in taxes. unless you change current tax policy, you cannot address the deficit situation without deep cuts in the health security programs. i want to have a quick question. there are some tax policies that

generate more economic activity and some that generate less. you mentioned the payroll tax holiday that generated more than the others. it put more money in people's thought it. is it true that there are spending programs that generate more activity than others in the economy? investment in the area of infrastructure and education provide for economic growth. isn't that also the case. >> yes. i want to be careful about the pieces of the budget. revenues and the social security charges. the thing is not possible to do is to maintain social security and the health programs in their current state and maintain the rest of the government has the same size economy and maintain revenues at their historical gdp.

one needs to move at least one. you could move to or three of those as you choose. it is not possible and as a-- two -- guilty or three of those as you choose. -- two or three of those as you choose. others might be more affected over long periods of time. we can try to provide that information to you if you are interested. >> i am appreciate that. i am just making the point that tax policy can have a positive economic impact. >> right. one of theendort,f, challenges we face is how to address these challenges in a

credible way. how willing but future congresses be to abide by spending that or all the disciplines that mwe might try o abode. i wonder if you might reflect on ways we might maximize the chances. with that be by strengthening its current programs or created new ones? >> the most effective way is to enact the changes into law today. enforcement procedures are only a backstop. ultimately, congress will need to enact changes in the legislation governing certain programs or for business tax

close its it wants to make those changes. if specific changes are enacted into law this year, there is a greater chance that they will take effect when the time comes that if what is enacted into law this year is simply a set of objectives for a total amount of spending and a total amounts of taxes and others with the benchmarks. >> structural reforms are likely to have more enduring results than long-term caps. would you agree? >> yes. that right. we have seen that historically. the gramm-rudman legislation was cast aside because it proved to be impossible to meet. the provisions of the early 1990's that try to make it more difficult for the congress to make budget deficit's worse

seemed -- ddficeficits seemed to work. people believe the deficit will be smaller in the future comes from a society -- from specificity. >> i want to thank all of our committee be -- members for being so accommodating. members have three business days to segment questions for the record. i hope it with this can respond quickly to that. membership can submit their questions by the close of business on friday, september 16.

we are now adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> more on debt and deficit reduction on monday. we will have live remarks from the president starting at 10:30 a.m. eastern. tonight on "road to the white house," rick perry and michele bachmann. >> i was not one of those people

who knew from the age of 12 that he wanted to be a doctor or a lawyer or for that matter a governor or president. i spent many a night pondering my purpose, talking to god, wondering what to do with this one like among the billions that were on the planet. what i learned as i wrestled with god was that i did not have to have all of the answers. they would be appealed to me in due time. >> as nominee of the republican party, i also tell you, i will not rest until i can elect 13 more like-minded titanium-spined senators who will go with me to repeal obamacare. i will raise money for them.

i will do whatever it takes to make sure they are elected. we must have a filibuster proof senate. that is the magic number we need, to get 13 more senators so that we get up to be 60 senator mark. >> "road to the white house " 9:30 p.m. eastern on c-span. >> speaker banner agreed -- speaker boehner agreed that the president's jobs plan had some aspects that he agreed with.

last week, the president set forth a set of proposals. the president's proposals offer an opportunity for common ground. the president's proposals are a poor substitute for the pro- growth policies that are needed to remove barriers to job creation in america, the policies needed to put america back to work. we need to recognize who creates jobs in america. it is the private sector. this building is named in memory of former president

ronald reagan, who recognized private-sector job creators are at the heart of our economy and always have been. that is the america i was raised in the. i think a lot you know that my -- that is the america that i was raised in. i worked in a tavern growing up. there are a lot of things you can learn working in a bar. [laughter] i will tell you more about that later. i ran a small business myself. i was 25 years old and went to work for a guy and he passed away and i found myself in a small business where i had one live customer and i was hanging on trying to succeed. i know what it means to meet a payroll, to hire people, to create jobs in the private sector. here in washington, there is a

fundamental misunderstanding of the economy. it has led to an awful lot of bad decisions. the players will hire if they have the right incentives. the dissenters must outweigh the costs -- and sentenced -- incentives must outweigh the costs. mandates have been overwhelming. private-sector job creators of all sizes have been pummeled by decisions being made in washington. they have been slammed by uncertainty from the constant threat of new taxes, out-of- control spending, and unnecessary regulations from a government that is always micromanaging and meddling and manipulating. they have been hurt by government ideas that offers

short-term giver -- short-term gimmicks rather than long-term economic growth. they have been hampered by a government that offers confusion to entrepreneurs where there needs to be clarity. small businesses are at the heart of our economy. they have been anti -- antagonize by a government that favors bureaucrats. government needs to provide reassurance and provide hope in our economy. my worry is that even after all of this, much of the talk in washington is about more of the same. more initiatives that seem to have more to do with the next election than the next generation. these economic decisions should

be made to liberate our economy. i think the american people are as worried about this as i am. private-sector job creators are rattled by but they seemed in this town of the last few years. i worry is that all of the uncertainty is turning to fear. this toxic in climate for job creation may be a permanent one. job creators in america are on strike. the problem is not confusion about policies. it is the policies themselves. the anger the americans have been dealing for recent years has turned to fear. i think it should bother all of us. america is a land of opportunity. it always has been. our economy has been built on

opportunity, on entrepreneurs, innovators, risk takers willing to take a chance because if they work hard they have a chance to succeed. government has made people less confident, but not more confident that they can succeed. more and more americans are realizing this and they are speaking out about it. in the last six weeks, i have travelled through my district and throughout the country listening to people outside of washington who are the key to making america work. a message today on their behalf is this. this is not that hard. what we have to do is liberate the economy from the shackles of washington. let our economy grow. we need to trust and make the judgments with the american people. governments get bigger, more meddlesome, and more intrusive. that is an instinct at direct odds with what is needed to

make the american economy move. job creation in america is facing a triple threat from our government. the first aspect of that threat is excessive regulation. during the joint session last week, i hosted one doesn't job creators from the private- sector -- one dozen job creators from the private sector. they are trying to help create more american jobs. in each case, the government is getting in their wake. we know some regulations are needed. we have a responsibility to regulate interstate commerce. there are reasonable regulations that protect our children and keep our environment clean. there are excessive regulations that unnecessarily increase the cost for consumers and small businesses. those excessive regulations are making it harder for our economy to create jobs. over the past couple of months,

we have seen two been its illustrations. last month, agents raided the gibson guitar factory in tennessee. it employs thousands of people. the company also cost as a result of the raid are estimated at $3 million. why? because gibson thought would overseas to make the stars in america. - bought wood -- bought wood overseas to make its cars in america. boeing was sued by a federal agency that wants to shut it down. american companies are free to go create jobs in china. but they are not free to create jobs in the south carolina. the administration has 219 rules

in the works that will cost the american economy $100 million each. under the current washington agenda, our economy is going to take a hit from the government of at least $100 million at least 219 times. it is reasonable to ask, is it wise to be doing all of this right now. the current regulatory burden coming out of washington far exceeds the government also andstitutional mandate i destroy job creation in our country at a time when we can least afford it. the current tax code discourages investment and reward special interest. at a time when it is clear that the tax code needs to be fundamentally reform, the first instinct to come out of washington is to come up with a new host of tax credits that

make the tax code more complex. it is theal aspect, spending binge going on here in washington. it has created a massive debt that threatens our ability to create jobs and to prosper. some still denied that of the debt is a threat to jobs. if you talk to anybody outside of washington who has to meet a payroll, they will tell us that out of control spending in washington is one of the things that concerns them most about our future. back in may, i was in new york city. i said if we did not take action soon, the markets would take action for us. last month, the markets action in the form of a debt downgrade and the possibility of future downgrades that caused the market to tumble. it will keep happening until we come as a government, act. the responsibility for fixing

this toxic and are met for job creation is a bipartisan one. a situation was created by washington's inability to make our economy work. it was created by micromanagement. we have a responsibility to work together in the coming months to remove these barriers and to liberate our economy. this is what the american people are demanding a bus. everything we do in the bus to companies to start with asking this question. -- do in the coming months need to start with this question. the budget control act establishes a joint select committee for the purpose of identifying $1.50 trillion of deficit-reduction. many have expressed their doubts about the joint committee's chances of success. i understand the skepticism.

a joint committee is no substitute for the president who controls most of the arms of government. i think the select committee has a huge opportunity. it has the chance to lay the foundation for economic growth by dealing with some of the obstacles standing in the way. the joint committee's mission is that as a reduction. that has anything to do with job growth in our country. as the co-chairmen of the joint committee said last week at the first meeting, all with that reconcile with jobs. speak to any fortify funded ceo or a small business person, all but debt hangs like the sword of damocles over their hiring decisions. that is a reduction and a path of fiscal responsibility --

it is not realistic to think the joint committee could be bright the tax code by november 23. it can certainly laid the groundwork for tax reform in the future that will enhance economic growth and enhance the environment for real economic growth in our country. the committee can develop principles for a broadbased tax reform that will lower rates and closed deductions, credits, and special car about in our tax code. tax reform should include closing loopholes, not with the purpose of bringing more money to the government. but because it is the right thing to do than the fair thing to do. if we are going to tackle tax reform, we should tackle all a bit. making short-term fixes in exchange for long-term flawed policy is not tax reform. tax reform should deal with the whole code.

it should result in a code that is simpler and more fair for everyone. tax increases are off of the table. i do not think they are a viable option for the joint committee. tax increases destroy jobs. the joint committee is a jobs committee. the mission is to reduce the deficit that is threatening job creation in our country. we should not make the task harder by asking it to do things that will make the assignments for job creation worse. i hope the president will meet this standard when he puts forth his recommendation for the joint committee next week. when it comes to producing savings to reach the $1.50 trillion target, the joint select committee has only one option. spending cuts and entitlement reform. the joint committee can achieve real deficit-reduction by reforming entitlements and taking real action to preserve and strengthen social security, medicare, and medicaid.

that been theh reforms are not real anunless they happen right here right now. it is a myth. we need to make sure it does not stop us from doing what needs to be done. most of the entire of reforms in the house republican budget were phased in over time. that is the way the joint committee should do them as well. modest changes can have a large effect tomorrow. gimmicks are unacceptable. as i told the president's economics team, we not going to do any gimmicks. that the reduction should be about -- should not just be about quantity. it should be about quality.

$1 billion in a match and a mercedes was not appointed happen. -- in imaginary savings was not going to happen. there were many skeptics about the joint committee's ability to accomplish this mission. i have expected it. there always are skeptics. there were a lot of skeptics last spring when i was in new york is that we should get spending cuts that were larger than the limit we gave the president. guess what? it happened. i think the joint committee can succeed and it must can see -- must succeed. it can help economic growth and job creation in our country. if it does not address the structural problems in our entitlement programs, it puts us in danger of war job destroying downgrades and setting into place the -- in danger of more

job destroying downgrades. as the joint committee does its work, there is a lot of other work in washington that these to be done. there are 219 major regulatory actions in the works by federal bureaucrats right now. we know seven of them will have an economic impact that is more than $1 billion. the biggest is an epa rule that could have an impact of as much as $90 billion. i think the president acted wisely by halting the implementation of that rule. i will urge the white house to build on their actions by disclosing to the american people the cross sections for the remaining 212 economically significant rules it has planned. i would also urge be credited to call a cabinet meeting. tell every member -- i would

also urge the president to call a cabinet meeting. tell every cabinet member i did not want anything to get in the way of job creation. the president post a cabinet is not doing their job if they are not constantly focus -- president's captain it is not doing their jobs if they are not constantly focused on top -- cabinet is that doing their job if they are not constantly focused on job creation. we have heard from job creators across america about unnecessary regulations that are hampering our economy. earlier i mentioned the situation in south carolina and at boeing. the house is working on a measure that would prevent the federal government from meddling in back situation.

the senate needs to follow the house and pass this bill and we need to send it to be president's desk. we are working on reducing the burden of excessive regulation and job creators. we will pass a bill that will require a congressional review for any regulation that has a major impact on our country. the house has identified the gene -- identified dozens of job crushing regulations. we will we peeled the holding rule, which serves as a -- repeal the holding rule. excessive regulations impede jobs in areas like firm bust -- farm dust.

we will work and other reforms, such as removing barriers to increase domestic energy reduction and removing barriers to trade, many of which are in the house gop jobs agenda. the united states senate needs to act too. the senate cannot sit idle on jobs in the budget. we have passed an array of bills in the house to remove barriers to job creation. those bills are piling up in the senate. the senate has not produced a budget. it must. a few of the things we can do in the weeks and months ahead to this reality time we and to bolster confidence among some employees. what is simple. both parties can boost confidence and reassure job creators by being cleared. there will be a shutdown of the federal government. we are not going to default on our debt.

united states will meet its obligations to its citizens and its creditors. i have been clear about these goals since the day i was elected speaker. we have been true to our work. another thing we can do with the in the area of transportation and infrastructure. the soy not opposed to repairing and improving our infrastructure. i want to do it in a way that supports long-term economic growth. that link the necktie with bill to an expansion of american make energy production. removing some of the of unnecessary government barriers that prevent our country from utilizing the bass -- vast energy resources we have and creating millions of american jobs along the bay. there is a natural link between the two. as we develop this was of american energy, we are going to meet modern infrastructure to bring back the energy to market. we can reassure job creators by

sending a balanced budget amendment to the senate. one of the things we did in the budget control act last month was to establish caps on spending. these caps are designed to hold back the growth of government while our economy expands and creates jobs. to ensure those caps are set in stone, we should ratify a balanced budget amendment. if the president wants to change the dynamic in washington, he should announce his support for a balanced budget amendment and to call on congress to send one to be senate without delay. we want politicians of all stripes to leave their my way or the highway philosophy behind, the all or nothing approach. it is not a workable mindset if we are serious about getting our economy on its feet again. our economy is facing a broad based, systemic crisis. it is going to require everyone coming to the table with their best ideas first and leaving their politics at the door.

with the courage to listen to each other critiques and discussions. an end to the name-calling and yelling and a question of the other's motives. leadership is not about that. it is about boggling down and getting to work. thomas edison once said, opportunity missed by most people is missed because it is dressed in overalls and it looks like work. we have the opportunity in front of us. the trick is to recognize it and to believe in it and to act on it. we know the challenge we face as a nation.

we have an opportunity and a chance to confront them. if we put politics aside and focus on our work, we will leave the country in a much better place. getting it done will require serious effort by both parties. there are some in both parties who would rather do nothing. they would prefer to sit this out and wait to be dealt a better hand after the next election. the old kicking the can down the road. that is not what i was elected to do. i know what the hand is that we have been dealt. instead of ducking from the challenge, we need to liberate our economy from the shackles it has been put in. i am ready. i think for the sake of our country and our economy that all of us are ready. i want to thank you for the opportunity to be here today and i look forward to your questions. [applause]

thank you. thank you all. >> thank you very much. when you were negotiating on the debt limit extension, did you have any doubt that an agreement would be reached or did you fear that we would actually default? >> no. if you were an optimist like me, you would not be here. i always believed we would be able to come to some type of agreement. i made it clear all year that not meeting our debt obligations was unacceptable. >> the white house and others have said there was an agreement, a grand bargain between you and the president. was there ever an agreement on a grand bargain, or not really? >> unfortunately, not. there was discussion on what

could happen or would happen. i told the president to not put revenue on the table. i thought we could get new revenue from a more fair tax code and a more it efficient tax code. over 10 years, i thought there was about $800 billion in additional revenue that would be available. i told the president i would always put it on the table if he were willing to make fundamental changes in our on entitlement programs. unfortunately, we could never get the yes on those changes to the entitlement programs. then the president decided he wanted more revenue, $400 billion more. that was a tax increase. it was on fortunate we were

unable to come to an agreement. it would have averted a lot of what happened. >> would you be in favor of resuming negotiations with the president to reach a grand bargain or do you think the committee is in charge of that? >> the committee is in charge of doing their work. i think it is hard to put humpty dumpty back together again. >> when you play golf with the president, it did not result in new bonding. [laughter] >> the president i get along fine. we come from two different worlds. i can do this job as a small business person who felt that government was too big and was out of control. i still look at myself as that same person. the president comes from a different ideology. we have a good relationship. sometimes the conversations we

have would be like two groups of people from two different planets who barely understand each other. i do not mean it in a derogatory way. there is a reason why you have two major political parties with big disagreements. >> you mentioned your background earlier. you grew up in modest circumstances. what is it like to have 11 brothers and sisters? >> chaos. the same thing i deal with every day. [laughter] [applause] >> i tell people that all of the lessons i learned growing up are the lessons i needed to do my job today. growing up in a big family, i had to learn how to get along with everybody. i played every team sport there ever was. my grandfather owned a bar. i mop floors and did dishes,

waited tables and tended bar. you have to learn to deal with every jack-- that what in the door. i needed all the skills i needed growing up to do my job. [laughter] >> i understand you still mow your own lawn back in ohio. is that true? >> it is true. i have to with knowledge that i am not home all the time. on labor day, i cut the grass. i sharpened the blade on the mower and make sure it had ample oil in it because when i am not there, my wife cuts the grass. [laughter] >> let me ask you about sequestration. on the agreement that you reach with the president, there will be sequestration if there is not an agreement reached. do you think there will be an agreement reached?

>> i am not -- is also a big believer in the committee process. in order to get something accomplished, the senate leaders wanted this joint committee. it is established. it will work. it will work because the leaders look each other in the eye. they made a commitment to make it work. i am optimistic that the committee will be able to do its work. >> one way of solving problems is to pick up a lot of revenue by eliminating the bush tax cuts, which expire in 2012.

would you regard that as a tax increase or with your caucus regarded as a tax increase to about or would you say that is not on the table, the elimination of those tax cuts? >> it is interesting. the current tax policy of the united states would generate $35 trillion in revenue over the next 10 years. that is the current policy that is in effect today. the current law that is in effect would mean that revenues would be at $39 trillion over the next 10 years. that is because the law already assumes that the bush tax cuts are gone. it assumes that increased taxes in the affordable care act would go into effect. it assumes that the alternative minimum tax will be there in full effect. it is going to be difficult for the committee to raise taxes because they have to raise taxes beyond the $39 trillion. this is the congressional budget office.

welcome to our world on how the government does accounting. the law already assumes that the bush tax cuts are going to be eliminated. >> if they were eliminated, the republicans in the house would not regard them as a tax increase because they are going to be eliminated otherwise? >> i would call it a tax increase. when you raise somebody's taxes, is a tax increase. [applause] >> the capital gains rate is 15%. would you see any possibility of that being raised in the near term? >> i would not. taxing capital is not going to help create jobs. is going to hurt a job creation. a lot of people in this room remember when we had had a

capital gains taxes -- high capital gains taxes. that will not help our economy create jobs. >> the president proposed a jobs bill in his speech to congress. is that going to be considered independent of the special committee? does that stops bill have any chance of passing? >> there may be some common ground between us. the congressional budget office is looking at the president's proposal. i would expect that the committees in congress will have hearings on that. it is too early to determine whether some of that ends up being the work of the select committee or whether we would do it separately. >> you have been speaker since the beginning of the year.

was the most difficult time in your term the debt extension talks? was that the most difficult. then you face? -- difficult you faced? >> i do not have many concerns. i never worried about the outcome in this. i have done the stress thing before. does not accomplish anything. i am a pretty simple guy. i know what i am trying to accomplish in i am just trying to find a way to get there. i think there is a way to do my job where people can disagree without being disagreeable. as much as the president and i can disagree about things, we really do have a good relationship. >> when you were a minority leader, you did not have as much influence in the way the

house operates as you do now. >> almost none. [laughter] >> how have you changed the way the house operates? how have you done your job differently than speaker pelosi did? >> i will let other people analyze speaker pelosi's speakership. i have seen the process of bringing legislation to the floor get tighter and tighter. in the last couple of years, five members decide what the beginning of a bill look like and the same five with decide what the end of the bill looks like. the rest of us would stand on the sidelines. i have always believed what i said in 1991. what do we have to fear in allowing the house to work? i am trying to get a more open process on the floor of the

house. i want the committees to be the working zones of the congress. they have been bypassed too much over the last 20 years. the committees have a responsibility to do real work. there is a byproduct of all of this. it is a way, on the committee level, to get members working together again. if the committee chairman knows his bill is going to come to the floor in an open process, he or she has to find a way to defend that bill and build a bipartisan support from the ground up. i can tell you that, so far, so good. members on both sides of the aisle are happy about the process. the majority leader has done a great job in reworking the schedule so that the committees can meet. we are actually going to vote during the daylight hours as

opposed to spending half the night doing things in the dark. so far, so good. i think members are pleased. >> often people want jobs and when they get them they find they are not as good as they thought. now that you are speaker, are you happy you got the job? >> i am on happy i got the job. people ask me if i am having any fun. somebody show me where the fun is. i am glad i am there.

i like to accomplish my mission. >> you are not thilling of leaving, are you? >> i am not leaving. no, i am not leaving anytime soon. >> the republican republican nominee for president, you haven't picked anybody you might support? >> no, no. i love all of them. well, some i might love more than others. >> if one of them said to you, you have done a great job, we would like you to be vice president of the united states, would you consider that? >> it's hard enough to go to funerals of people i know much less people i don't know. >> all right. this doesn't always have to be boring, all right?

>> so -- so today, right now, you would say the biggest challenge that the country has is solving the debt problem and deficit problem, is that what your main focus is as well as job creation? is that your twin focus, things you are worried about? >> that would be right up near the top of the list. >> in terms of national security issues, do you have any views on whether our troops should be brought back sooner or not, in afghanistan, in iraq? do you have any comments on foreign policy? >> i think our greatest national security issue is our unsustainable debt. there are a lot of reasons why we have to deal with the debt. trust me, the national security side of this is one of them. but when it comes to our national security, i think we have to find a reasonable place, working with the iraqi

government on what level of troops need to be there. it's clear that the iraqis are not in a position to be able to defend themselves. we have -- we have invested lives and our treasury in helping to build a democracy there. and we have obligations there. we should not be precipitous and put at risk this fledgling democracy in the middle east. in afghanistan, it's a different mission. i think the president by and large is on the right path in terms of drawing down the extra troops that were put there. but let's all understand that the threat that we face from radical jihadists, this threat will go on long after everyone in this room is gone. we are dealing with a group of people who are trying to right a

wrong in their minds from 1,000 years ago, and having success in afghanistan is critically important to the long-term future of our country. as difficult as uncomfortable as it is. >> today, if the presidential election were held today, do you think your state, ohio, would go for the president? >> you don't know what the presidential makeup is going to look like. you don't know who his opponent is going to be. you can't beat somebody with nobody. but i think the president may have a tough time in ohio today. >> in your house you won a lot of seats last time, 60-some new seats. it is often said that the freshman members are difficult for you to control. is that a fair statement? i was a rabble rousing freshman at one time, 20 years ago. sometimes they apologize to me

for being difficult. i get a chance to look at them and say, you have no idea what difficult really means. but our freshmen have not really been a big challenge. they've had a baptism of fire. there are 87 of them. 63 of them knocked off incumbent democrat members, and whether it was the continuing resolution to fund our government after march 9, whether it was the budgets, and then the debt limit increase, they've had a real baptism. but i've got some more senior members who, god bless them, you know, whatever i do is never good enough. and i understand that. i've been around this process.

it's just to be expected. >> coming from the modest circumstances you did and you rose to the speaker of the house, it's very impressive. you have been a minority leader and majority leader and then became speaker. but one of the most amazing things to me is that you were in the house leadership and then out of the house leadership. how did you manage to get back into the house leadership, which no one else has really done? >> you mean being thrown out of the leadership and then coming back? i never took what happened in 1998 personally. newt decided to leave. they tried to go after the majority leader, the whip, and then i was the number four guy. i should have just raised the white flag. but i decided when i walked out of that room, walked down the hall, i looked at my then chief of staff who is now back as my chief of staff, and i told him that we are going to earn our

way back. i said, i am never going to let the bastards see me sweat. i am never going to let them see an ounce of disappointment on my face. i am going to let my work speak for itself. you know, everybody else left, kind of embarrassing. but i stood on the house floor a couple of years. i wasn't happy. i didn't want to smile. but i just stood there and smiled. i decided, earn my way back. >> it worked out for you. what is your relationship with mitch mcconnell in the senate? >> well, mitch and i are really -- we have very different permities. we are very close friends, and we have worked together for about four years. it's really the first time in decades that you've had two leaders from the same political party in the house and senate

who have had a good relationship. i frankly think it's been good for him. it's been good for us. we talk every couple of days. our staff talks every day. i think it makes the process move smoother. >> sometimes people say be careful what you wish for because you might get it. if we had a republican senate and a republican house and a republican president, you are the speaker, is that going to be easy to do? >> i told you, i was born with the glass half full. every day you wake up, you get dealt a hand, like a hand of poker. you got to play the cards you were dealt. whether it was growing up in my business career, political career, you have to play the hand you're dealt. it would be nice if you got dealt five aces every time, but it doesn't happen very often.

many times you wake up and you have a really bad hand, but you still have to play the hand. you can't just throw it in. you have to play the hand you're dealt. i try to be realistic about the hand that i was dealt and try to make lemonade out of lemons. >> the process that you've set up in the congress now to reach an agreement, the special committee, do you think it will reach an agreement before the deadline? in other words, we won't really know what the decision is until the day before? or you can't say? >> who knows? this is washington. there are some things that are going to be the way they are, which means it's probably going to be closer to november 23 than it's going to be to november 22. [laughter] >> two final questions. two final questions. was there any regret that you have as speaker, anything you

would have done differently than the way you did it, or are you pretty much happy with the way things have been handled? >> i feel pretty good about it so far. i don't really have any regrets. i tried to move this deficit reduction bill early, but some of my colleagues didn't want to go along. so i had to sit down with a lot of the members and try to bring them along gently. nobody on my staff has ever heard me scream. i don't do anger. i don't carry a whip around with me. i have to rely on just being straight up with people. there were a couple of freshmen -- i had a couple young whipper snappers who seemed to have all the answers. so i brought them in my office and closed the door. i know these two pretty well. i looked at them and said, boys,

that door is not going to open until you say yes. it can be 30 seconds, 30 minutes, doesn't matter. it could be three hours. so i've got a week and a half's worth of cigarettes in that chess over there. i am not heavy-handed with my colleagues. the other thing that i didn't realize until somebody pointed it out was that when you look at that big deficit reduction deal that we got passed, typically that would have cost the leadership $10 billion or $20 billion worth of goodies, a bridge there, money for a hospital here, but we got rid of the earmarks. i have been here 20 years, never asked for one. i told my constituents that if they thought my job was to rob

the treasury on my behalf, they had the wrong guy. i had this crazy idea when i was running for majority leader in 2006 that if i could start a big fight over earmarks that i could win this race for the majority leader. i almost cut my own throat because i didn't realize everybody did earmarks. but earmarks, first time in our country's history that there will be no earmarks in any bill this year. so it made getting the big deal -- [applause] it made getting the big deal harder, but i didn't quite realize it at the time, that you had to sit down and talk about the facts. people couldn't hold you up. >> so when you were a high school linebacker playing for a very famous coach, did you ever think you might be a college and professional athlete?

>> no, that was way beyond -- this is a different era. this is back when we all played sports and all my brothers played sports with me, but no, i always wanted to be a salesman. you know, eventually that's what i did. i was in the sales and marketing business in the packaging and plastics industry. i thought i was going to do that the rest of my life. but along the way i got involved in my neighborhood homeowners association and i ended up in the united states congress. this, too, could happen to you. [laughter] >> i want to thank you for your time and your candid thoughts. i appreciate your being here. thank you. >> thank you. >> thanks very much. [applause]

captioned by the national captioning institute --www.ncicap.org-- [captions copyright national cable satellite corp. 2011] >> representative henry waxman here on c-span. on monday the senate will start debate at 4:30. they'll take up a vote at :30 on that bill -- they'll take up a vote at 5:30 on that bill. you can watch live coverage of

the senate on monday at 2:00 p.m. on c-span 2. on tuesday the house returns for business. later in the week they're expected to debate a resolution which would extend funding for short-term federal government programs. votes on the measure are possible on wednesday. watch live coverage of the house on 2:00 p.m. eastern here on c-span. next, a house energy and commerce subcommittee hearing on a $535 million government loan to solyndra, a solar equipment manufacturer that filed for bankruptcy in september. you'll hear remarks from officials from the department of energy and office of management and budget give an overview of their involvement in the review of a loan gean awarded to solyndra. also testimony from jonathan silver, a former hedge fund

executive who now runs the energy department loan program. this is about two hours and 45 minutes. >> thank you very much, mr. chairman. while we continue to try to revive our economy, it should be clear to everybody in this room that solar energy development is not a democratic or a republican issue. it is an issue of securing american energy innovation for decades to come. so we should have a larger discussion about how government can appropriately support the development of domestic clean energy technologies. as we all know and as we can tell from the chairman's opening statement, there has been a great deal written in the media about today's hearing. unfortunately the issue has become very politicized. the narrow purpose of today's hearing is to examine the process and decisions surrounding the solyndra loan

guarantee, but we can't help but look at the issue through the larger lens of what our national energy policy should be going forward. as we think about the broader issues, it's important to see just what happened with the solyndra loan. the chairman said that the minority of this investigation -- we believe the investigation into solyndra is important to understand both what happened here and also what our appropriate energy policy is. we never opposed production of any documents. we opposed the subpoena because we believed the documents were being produced in good time. but having said that, i am happy that we now have the documents and i think those documents should be made available to everybody. the documents and briefings i reviewed show that the department of energy in both the bush and baum administrations supported solyndra's loan guarantee. the bush administration d.o.e.

invited solyndra to submit a full application and by the end of the period, they sent the document to its critical committee for review. d.o.e. continued to work on the application and ultimately approved the application in 2009. in 2010, a pre-i.p.o. audit of solyndra raised concerns about solyndra's viability. by late 2010, d.o.e. had determined that the company was headed towards default. d.o.e. was faced with a choice at this point, restructure the loan to increase the chances solyndra could repay the taxpayers' funds or cut their losses and expect the possibility of default. ultimately, d.o.e. determined restructuring was the course of action most likely to preserve the full recovery of the loan value. under terms approved in february, 2011, solyndra was

given more time to repay the loan. the government obtained additional collateral and solyndra was required to raise an additional $75 million from private investors that would have privacy over the government's interest in the event of liquidation before 2013. this july solyndra's c.e.o. visited my office as well as other members and talked about the strong demand for the company's product and how 2011 revenues were projected to double from 2010. now, as we all know, less than two months later, the company announced it would file for bankruptcy. and now the federal government's recovery of over $500 million loaned to solyndra is at grave risk. it's always easier to assess decisions in behind -- sight but it is critical we get answers to key questions. did the bush and obama administrations conduct appropriate due diligence before september, 2009 guarantee

approval? second, did the department of energy sufficiently monitor the financial status of solyndra after loan disbursements began? third, did solyndra make accurate representations to the government about its financial prospects both before and after approval of its loan guarantee? and with solyndra's financial situation, did the government make the correct decision about restructuring the loan? in examining these issues, i want to underscore that we not only lose sight of the policy context for the loan guarantee program that supported solyndra. this program was designed to help u.s. companies to grow and compete in a global clean energy market in which countries like china and others are providing a wide range of incentives and support for domestic industry. even if we conclude that bad judgments were made on the solyndra loan, we've got to

continue to work hard to develop and implement appropriate policies that give american clean energy investors the support they need to make the u.s. a market leader in the future and also that protect the u.s. taxpayer. these are critical decisions. ranking member waxman and i have asked that the solyndra c.e.o. and c.f.o. be called, and i believe that's going to be happening in short order, because i am perplexed how they could be in my office in july telling me things were looking better and filing for bankruptcy two months later. with that, mr. chairman, i yield back. >> the gentlelady mentioned in her opening statement about the documents we have been reviewing. would she consider a unanimous consent request that all those documents be made part of the record? with that, we recognize the distinguished full chairman of the energy and commerce committee, the gentleman from michigan, mr. upton.

>> thank you, mr. chairman. in 2009 solyndra was the first company to receive a d.o.e. energy loan funded with stimulus dollars. just two years after getting $535 million in taxpayer money and being touted by president obama as a model for how the government's venture capital program in green technology should work, the company has filed for bankruptcy and been raided by the f.b.i. we are starting to look at the d.o.e. loan guarantee program and solyndra's deal in february. some question the basis for this investigation. after four months of wrangling with the administration to produce relevant documents, the committee was forced to issue a subpoena to o.m.b. i think solyndra's recent bankruptcy filing and last week's raid show that the committee was more than justified in its scrutiny of the deal. pursuant to our oversight functions, we have an important responsibility to pursue answers regarding the use of taxpayers' money. our investigation raises several

questions about whether the administration did everything that it could to protect taxpayer dollars. why did the administration think solyndra was such a good bet? why did the administration push ahead with restructuring the solyndra guarantees this year when some in the government voiced serious concerns about the commercial viability of the company? why did d.o.e. and o.m.b. allow the government to be subordinated to the private investors in apparent violation of the law? i look forward to the testimony of mr. zance and mr. silver, executive director of d.o.e.'s loan program office. with solyndra just one bad bet violation or is it the tip of the iceberg? d.o.e. has closed over $8 billion in loan guarantees to other green tech companies and has about $10 billion left to spend in the next few weeks before the deadline.

how can the administration exercise the proper controls when doling out another $10 billion in the next couple of weeks? in this time of record debt, i question whether the government is qualified to act as a venture capitalist, picking winners and losers and shelling out billions of taxpayer dollars to keep them afloat. we began this investigation to shine a bright light on a program shrouded in secrecy and uncertainty. new details are coming to the forefront about who decided to allocate billions in taxpayer dollars and where and why. this is important information, and the public has a right to know how their hard-earned dollars are being spent. but it's not the end of our inquiry. the answers we have turned up so far spark additional questions and i am committed to pursuing this investigation and conducting rigorous oversight of the loan guarantee program and its recipients. i hope the administration and our friends on both sides of the

aisle will share our commitment to getting answers. i yield to the gentleman from texas. >> thank you, chairman upton. i think this is a litmus test of how this subcommittee is going to work together to investigate something that needs to be investigated. i was gratified to hear ranking member degette's request that the record include all the documents that have been discovered so far because at the beginning of this investigation, my friends on the minority side did not support the subpoena to get those documents. mr. chairman, i support loan guarantee programs for alternative energy. having said that, i do not support the process by which this particular loan guarantee was announced. it's curious to me that in january of 2009, the credit committee unanimously recommended against this loan guarantee, but two months later

after president obama had been sworn in, the credit committee approved, as far as i can tell, the identical loan commitment with no intervening improvement in the process. a d.o.e. staff member at the time said this project is going to run out of cash in september of 2011. how prescient was that, mr. chairman? i look forward to the testimony of these officials, and i look forward next week to the testimony of the members of the company. mr. chairman and subcommittee chairman and ranking member degette and ranking member waxman, i strongly support you all working together. i yield back. >> i thank the gentleman. i yield the balance of the time to dr. burgess. >> thank you, mr. chairman. ranking member degette referenced the fact that going back to the bush administration, this discussion was going on in

the department of energy. i do want to take a moment to point out that the credit committee at the department of energy, january 12, 2009, the last days of the bush administration, the day after their meeting, it was a unanimous decision not to endwage in further discussions -- engage in further discussions with solyndra at this time. we all know the bill was about projects. it appeared that the shovel that this project was ready for was to bury it somewhere. yet it was resurrected. i believe in redemption. i believe in the afterlife, but i don't believe this was the wisest and best use. i do want to convey the message to the members of the administration that when this committee calls, you respond. when we ask for documents, you produce them of the when we schedule a hearing, you show up. we are a co-equal branch of government. we have a responsibility to protect the people's money as well, and it does not appear that those interests were followed. unfortunately, now the taxpayers are going to suffer.

i yield back the balance of my time. >> the distinguished ranking member, the gentleman from california, is recognized. >> thank you, mr. chairman. today we are holding a hearing on the loan guarantee provided by the department of energy in 2009 to solyndra, a u.s. solar panel manufacturer. this is an important hearing. taxpayers have over $500 million at risk as a result of solyndra's bankruptcy. we need to understand what happened, who should be held accountable, and how we can avoid future losses. we also need to ask whether solyndra misled federal officials. in july the company's c.e.o. met with me in my office. he assured me that the company was in a strong financial condition and in no danger of failing. in fact, he said the company was going to double its revenues in 2011. i have a hard time reconciling those representations with the company's decision to file for

bankruptcy one month later. committee staff has now reviewed thousands of pages of internal documents from the department of energy and the office of management and budget. they raise a number of questions. the documents show that under both the bush administration and the obama administration, d.o.e. officials backed solyndra. they believed that silicon-free -- mr. chairman, may i have the opportunity to speak? >> absolutely. the committee will be in order to listen to the gentleman's statement. >> they believe in silicon-free solar panels offered cost savings and its shape reduced installation costs. and they thought the internal reviews they conducted and the external studies they commissioned showed solyndra could compete successfully in the global marketplace. well, these rosy scenarios were not realized. today we will ask why. is the reason unforesign

developments in the global marketplace, as solyndra and d.o.e. argue, or is the reason sloppy or inadequate vetting or worse yet, corps malfeasance? both d.o.e. and o.m.b. knew solyndra was facing difficulty meeting its loan obligation. this triggered a vigorous internal debate about what the government should do to protect the taxpayers. d.o.e. projected that an immediate liquidation would return less than 20 cents on the dollar, so they favored restructuring because of the potential for recovering more of the taxpayers' investment. some o.m.b. officials warned against restructuring on the grounds that it might not be enough to avoid bankruptcy and default. well, that was not an easy decision, and we need to ask whether the right choice was made. given the bankruptcy of solyndra and the dollars now at risk, we have an obligation to the taxpayer to investigate the

transaction thoroughly. that's why i welcome this hearing and why ranking member degette and i have urged chairman stearns to hold another hearing where we can question solyndra's c.e.o. i disagree, however, with the policy conclusions by republican colleagues. they say the collapse of solyndra shows the folly of federal investments in solar and other clean energy technologies. they argue that the government should not pick winners and losers in the energy marketplace. this sounds superficially appealing, but there is a fundamental flaw in their logic. the majority of republicans on this committee deny that climate change is real. if you are a science denier, there is no reason for government to invest in clean energy. it's ironic that at this very moment in washington, c.e.o.'s of a number of corporations,

including bill gates, norm augustine, chad holiday, bank of america, the c.e.o. of cummings, are all here representing american energy innovation counsel and they are calling for major new investments in alternative energy and renewable energy so that we don't fall behind the chinese and others who are competing in this area and outcompeting us. if you live in reality, you know the world cannot continue its dependence on foss sill fuels, that we are in danger of losing business to our competitors. in the last month, three solar manufacturers have declared bankruptcy because they couldn't compete with chinese companies. this weekends the business columnist steve pearlstein wrote, listening to the republicans talk about the economy and economic policy is like entering into an alternative universe.

he is right. republicans on this committee oppose putting a market price on carbon emissions. they oppose e.p.a. regulation of carbon pollution, and now they oppose government investment that promotes clean energy alternatives. that's an economic death sentence for fledgling clean energy companies that have to compete against both an entrenched fossil fuel industry and heavily subsidized foreign firms. it's a grievous blow to our future prosperity. thank you, mr. chairman. >> i thank the gentleman. with that, the opening statements are concluded. i ask unanimous consent that the written opening statements of the members be introduced into the record. anyone who wishes to do it? without objection, the documents will be so entered. to our witnesses, you are aware the committee is holding an investigative hearing. when doing so, we have had the practice of taking testimony under oath. do you have any objection to

taking testimony under oath? the chair then advises you that under the rules of the house and the rules of the ki, you are entitled to be advised by counsel. do you desire to be advised by counsel during your testimony today? in that case, if you would please rise and raise your right hand, i will swear you in. do you swear the testimony that you are about to give is the whole truth and nothing but the truth, so help you god? you are now under oath and subject to the penalties set forth in title 18, section 1001 of the united states code. we welcome you to give a five-minute summary of your written statement. so with that, mr. silver, we welcome you with your opening statement.

>> thank you, chairman, ranking member. and members of the subcommittee. my name is jonathan silver. i am the executive director of the loan program's office. i joined the department of energy and took this position in november of 2009. in 2005, recognizing that there was a systemic shortage of private debt financing for innovative clean energy projects from renewables to clean coal to nuclear power, president bush signed bipartisan legislation that established the title 17 loan program. the program was specifically designed to support next generation energy projects, which involve technology and market risks that private sector lenders often cannot or will not underwrite. other governments have recognized the value of such programs as well. germany and canada already operate government-backed clean energy lending programs. the u.k., australia and india have announced the intent to do the same.

but none have been as aggressive as the chinese government, which last year alone provided more than $30 billion in credit to its country's largest solar manufacturers. that's roughly 20 times larger than america's investment in the same period. why is china making this investment? because the race for solar manufacturing jobs is a race worth winning. over the next few decades, this will become a global market worth trillions of dollars. in 1995 the united states manufactured more than 40% of the solar cells and modules sold worldwide. today it's 6%. meanwhile china's share has grown from 6% in 2005 to 54% today. china is now home to five of the 10 largest solar panel manufacturers in the world. seven of the 10 largest are in asia. only two are in the united states. it is in this context that we should discuss the solyndra transaction. solyndra submitted its initial

application in 2006. by late 2008, the loan program staff considered solyndra the most advanced of the projects it had reviewed and the likely recipient of the program's first loan guarantee. in fact, by the time the obama administration took office, the career staff had already established a timeline for issuing the company a conditional loan commitment in march of 2009. in march, on the exact skid you'll that had been developed during the bush administration, the program issued solyndra a commitment. in september after several more months of additional due diligence and documentation, d.o.e. finalized the loan guarantee. although i was not at the department at that time, it is my understanding that the transaction went through nearly three years of rigorous internal and external due diligence, including reviews by a leading independent engineering firm, the department's own solar experts, and a blue chip law firm all before any taxpayer funds were put at risk.

the federal government was not alone in its assessment of solyndra's potential. some investors collectively invested $1 billion in the company after conducting due diligence on their own and before any taxpayer dollars were deployed. in 2009 solyndra appeared to be well positioned to compete in the global marketplace. solyndra manufactures solar cells which avoided the high cost of a critical component in making conventional solar panels and certain costs associated with installing flat panels. but polysilicon prices dropped, taking solyndra and many analysts by surprise, and providing a significant benefit to several of the company's chinese competitors. these developments made solyndra's business model more challenging. the company took steps to respond, cutting costs as revenues increased 340% between

2009 and 2010, from $100 million to $140 million. the company ran short of cash and faced bankruptcy without an emergency influx of capital from its investors. the department of energy thus faced a difficult choice, whether, a, to refuse the proposed terms of that financing, ensuring that the company would close and the government would recover only a small amount of its loan, or b, to allow the company to take the financing, giving it and its workers a fighting chance of success and the government the possibility of a higher recovery on that loan. after extensive analysis both internally and from independent market and financial advisors and using the same tools and approaches that private lenders use in such circumstances, the department concluded that restructuring the loan gave the u.s. taxpayer the best chance of being repaid. unfortunately, the changes in the solar market have only

accelerated. chinese companies have flooded the market with inexpensive panels, and europe, historically the largest purchaser of panels, is in the midst of an economic crisis. the result has been a 42% drop in solar cell prices in the first eight months of 2011 alone. these changes were particularly damaging to solyndra and as you know the company declared bankruptcy earlier this month. while we are all disappointed in the outcome, solyndra's situation should not overshadow the professional work that the department's loan programs have done to date or the need to continue to find ways to support clean energy in this country. developing a robust clean energy manufacturing sector in the united states is critical to our long-term national interests and one of the most important tools as our global competitors have learned is low-cost financing effectively targeted and deployed. this isn't picking winners and losers. it's helping ensure that we have winners at all.

we invented this technology and we should produce it here. the question is whether we are willing to take on this challenge or whether we will cede leadership in this sector to other nations and watch as tens of thousands of jobs are created overseas. the administration believes this is a battle we must fight and win. mr. chairman, i thank the members of the committee and i look forward to answering your questions. >> thank you. >> thank you for inviting me to testify on o.m.b.'s role in the implementation of the loan guarantee program. the d.o.e. loan guarantee program authorized by congress entitles 17 is a key part of the administration's efforts to promote economic growth and create jobs across the country to jump-start the clean energy economy. as you know, o.m.b. engages in general oversight of the

programs being executed by federal agencies. therefore, o.m.b. has been an active participant in interagency discussions about major milestones in title 17 helping to ensure they're consistent with the framework and administration policy. o.m.b. also has a particular statutory role in the title 17 program under the federal credit reform act of 1990, known as f cra.

o.m.b. ensures that costs are accounted for appropriately. in performing its statutory role under fcra, o.m.b. works closely with cost models. based on these models, o.m.b. exercises final approval authority over credit subsidy costs to ensure that the committee of direct loans and loan guarantees are presented and reflect estimated risks consistently across federal agencies so that taxpayer funds are invested in a prudent and effective fashion. by contrast the final decision on whether to issue the loan or guarantee rests with the agency implementing the program. d.o.e. in the case of title 17. in the solyndra guarantee -- loan guarantee, the proposed cost was conducted in august, in september of 2009. while i was not directly

involved in the aspects of the transaction, what i have learned since indicates that the approval process included a thorough analysis of the d.o.e.'s calculation of the estimated cost. they addressed a series of specific questions about its analysis. based on these skgses, o.m.b. and d.o.e. agreed on the credit subsidy cost and o.m.b. assured it was budgetted and accounted for appropriately. the loan guarantee was then issued in september, 2009. in february of 2011, d.o. elft undertook a restructuring of solyndra's debt in light of the acute financial troubles the company was experiencing. o.m.b.'s statutory role in the restructuring transaction was the same as its role in the

original transaction to ensure that the credit subsidy was consistent with o.m.b.'s possibilities. o.m.b. worked closely with d.o.e. to understand the specifics of the proposal before making a cost determination. d.o.e. provided information and analysis to o.m.b. to show that the loan was in an imminent default and that the restructuring proposal was expected to be less costly to taxpayers than other options, including liquidation. o.m.b. determined that d.o.e.'s analysis was reasonable and reflected the information as it was understood at that time. since then a challenging global solar market has continued to effect a number of solar manufacturers including solyndra. the company's announcement that it was suspending operations and filing for bankruptcy is without a doubt a very unfortunate

outcome and one that will limit the government's recovery of funds loaned to the company. congress designed the title 17 loan guarantee program to fund innovative clean energy projects that might not otherwise receive the necessary capital for deployment. the program envisions that while some of these projects might not succeed, others will contribute to the country's ability to achieve its clean energy goals. o.m.b. will continue to work with d.o.e. to help make the title 17 program a success and to ensure that the costs associated with the inherent risk in the program are budgetted and accounted for to protect taxpayers' interests. mr. chairman and members of the subcommittee, i am pleased to answer any questions you have. >> i thank the gentleman. i will start with opening questions and they're directed to you, mr. silver, if you could possibly just answer yes or no. in your testimony, you claim that some of solyndra's due diligence was done by the end of

the bush administration. is that correct? >> yes. >> that's all i need. isn't it true that at the end of the bush administration a d.o.e. credit committee met on january 9, 2009, to consider the solyndra guarantee? were you aware of that? >> the credit decree is maid up of -- >> i am -- just answer the question. >> which met in early 2009. that committee recommend that the loan guarantee be remanded to the loan programs office stating, quote, the number of issues unresolved make a recommendation for approval premature at this time. were you aware of the credit committee's meeting when you submitted your testimony to the committee this morning? >> i was. as i said -- i was not there at the time, but it is my understanding that it was remanded back for additional -- >> i am asking the questions. i just need a yes or no.

i think he has given an answer. in an email sent after the credit committee meeting, a member sent an email to fellow members in that january 13 email, he states quote, african vassing the committee it was a ksh -- unanimous decision at that time. do you understand the bush administration decided that the due diligence was not complete at this point? >> no. the credit committee you are referring to, made up of a group of career professionals, is also exactly the same credit committee that then approved -- >> i understand that. what i just quoted to you is the truth, isn't that correct? >> i haven't seen that email, sir. >> you can assure that it is. dt o.e. should quit talking with solyndra. in your testimony, you stated that regarding solyndra much of

the extensive due diligence on the transaction was conducted between 2006 and the end of 2008. i would like to bring this information to your attention. isn't it true that the loan program's office didn't hire its first federal employee until august 1, 2007? >> i am not aware of that. that sounds right. >> if you don't know, we can provide this information. we provided it to the committee staff through a power point presentation. by the end of 007, isn't this true that the office had only eight federal employees? >> again i don't know the exact number. >> so who was doing all this extensive due diligence that you keep talking about at the loan program? >> i can say the department is made up of 115,000 working professionals including 70,000 scientists a number of whom are solar experts. >> but the d.o.e. credit committee was responsible authority for approving the

credit of solyndra? >> no. technically, sir, the credit committee simply reviews a transaction and recommends it for approval. >> i think we have established they did not think they should go ahead. isn't it also true that during that time period, d.o.e. was reviewing the 140 applications it had received in response to its first solicitation, how did d.o.e. have time to do extensive due diligence on solyndra from 2006 to 2007 like you indicated? that baffles us. >> if you give me a moment to explain i think i can. the 2006 solicitation resulted in 143 submissions. the loan program staff and others at the department reviewed those for eligibility, which is a thinner review than the full due diligence, and recommended 16 applications to file a fum application. solyndra was one of those.

>> but mr. silver, isn't it true the first draft of the marking report wasn't submitted until march of 2009? you were there. suspect that correct? >> no, i was not there at that time. it is my understanding from reviewing the record that there were several market research reports that were directly relevant that were used as the basis for assessment and there was a direct marketing report done for the project which was produced -- >> our records show an independent engineering report that you cited in your testimony was submitted in early january, 209? >> i think that's the case. >> the memorandum submitted by the morrison and foster which you have cited in your testimony, that also was submitted in early 2009, correct? >> i believe that -- >> how can you explain the statement in your testimony that the due diligence was conducted in 2006 and 2008? >> i didn't say it was conducted

in 2006. i said the application was received in 2006 and due diligence began and continued from late 2007 through 2008. it would be logical for the reports that you are making reference to here to be completed after that work was done during that period. >> mr. silver, my time has expired. i think what was established is that the credit committee during the bush administration sat on the solyndra deal to be premature and remanded it for further work and we have all the evidence and clear evidence. so we are a little puzzled with your opening statement. with that my time is expired. i recognize the ranking member, ms. degette. >> thank you. i would like to ask unanimous consent to put the credit committee recommendation that the chairman referred to into the record so we can know what we are talking about. >> by unanimous consent so ordered. >> thank you very much. mr. silver, i have had staff hand you a copy of this credit committee recommendation. have you seen this document

before? >> no, ma'am. i have not. >> this is the document that the chairman was referring to where the credit committee remanded the project to lgpo, that they denied the application. that's the thing the chairman was referring to and it was also the information that he had up on the screen that was from this memo. now, as i read this document, it says while the project appears to have merit, there are several areas where the information presented did not thoroughly support a finding, but the project is ready to be approved at this time. then it lists four areas that it says need to be supplemented. do you see that? >> yes, ma'am. >> at the bottom it said the credit committee is appreciative of the hard work done by the origination staff but believes the number of issues unresolved makes the recommendation for approval premature at this time. do you see that? >> i do. >> it concludes, therefore the committee remands the project to

the lpgo for further development of information addressing the issues outlined above, correct? >> yes, ma'am. >> so this document is not a complete denial of the application, it's remandsing it for more information, correct? >> not only is it not a complete denial, it would be typical of a credit committee to perform its function in exactly this way. >> was that data eventually developed and submitted to the d.o.e.? >> the data was additionally developed and a summary of that data was presented to the -- >> in march of 2009 the application was approved, correct? >> yes, ma'am. >> was that data submitted as part of that application, this data that was requested? >> i wasn't there but it is my understanding that is the case. >> thank you. i wanted to ask you a couple of questions about what kind of policies and incentives we need

to have in the united states to promote competitiveness in the clean energy market. this is what you talked about in your testimony. in your written testimony, between what you said was between 1995 and 2010, the cells and panels manufactured in the united states dropped to just 6%. we have seen this with some colorado companies that are trying to develop solar but they can't find cells that are manufactured in this country. since 2005 china's market share has increased from 6% to 54% and half of the world's 10 largest solar panel manufacturers are now chinese. so the question i have is, what does that tell us about the state of play in the solar manufacturing industry? >> congresswoman, i think it tells us that the rest of the world takes this industry and this industry opportunity enormously seriously, has a mull

-- multidecade perspective on its importance, believes that it will be a trillion dollar market that will generate tens of thousands of jobs. >> what is the chinese government doing that you know of to provide support to its solar industries? >> the chinese government has already committed up to $30 billion of credit to its four or five largest solar panel manufacturers. it generally and frequently provides both zero cost financing, occasionally free land and other subsidies to that sector. >> and does cheap labor play a part in china's ability to dominate the world market on this solar development? >> it certainly has in the past, and cheap labor does play a material role in other parts of the world in their competitiveness. increasingly, however, the challenge is becoming one related to government support for the industry itself. >> so it's not as much cheap

labor as capital that the chinese government -- >> correct. access to inexpensive debt capital, yes. >> so based on your experiences at d.o.e. and the private sector and your understanding of initiatives of other governments like china, do you really think it's worth us having policies like this title 17 loan program and other policies to support solar, or should we just walk away from it as a government? >> i can't imagine a scenario in which we would willingly as a country walk way from what will be one of the largest industries in the world over the next several decades. >> do you think there is any way we can actually compete? >> yes. we have an incredibly strong, innovative work force. what we have to be able to support not only innovation at the r&d level, we have to support commercial deployment. without that we cannot continue to recognize the benefits that

come from innovation. >> so irrespective of the details of the solyndra case, which are still unfolding to this day, you think that these kinds of loan support programs are important to development of the u.s. solar energy and jobs, is that right? >> i think they're critical. they are only part of the fabric of what is necessary, but they are critical. >> i wanted to ask you, because you talked about this title 17 funding, and there are a number of other projects that are receiving and i believe over 40, has it worked in other projects? is it working in other loan situations? >> the program is relatively new, so loans have recently closed for the most part. we had every reason to be optimistic that the portfolio as a whole will perform. >> and how large is the portfolio as a whole? >> i defer to jonathan on specific numbers. i think you have a good estimate

in what you said. >> thank you very much. >> the gentleman from texas is recognized for five minutes. >> thank you, mr. chairman. just for the record, are you two gentlemen career civil service employees or political appointees? >> political appointees, sir. >> political appointees. >> i want to follow up a little bit. on january 9 of 2009. the credit committee which is a part of the department of energy, i believe did recommend against going forward with the solyndra loan. less than two months later on march 12, 2009, the credit

committee conditionally approved the loan. first of all, is that factually correct? >> the timeline is correct, sir. the credit committee, first credit committee that met did not reject the loan. they remanded it back for further analysis. but your timeline with respect to that is correct. needed additional information brought in, in march the same committee did approve an additional.

correct? >> technically, the credit committee did not approve additional commitments. they recommend transactions for approval, which are further reviewed by a group called the credit review board. >> instead of putting up a red light, they will put up a green light, or at least a yellow light. they indicated the initial questions that have bee >> they indicated that the initial questions have been addressed. >> what changed in the interim? conducted. >> specifically? >> due diligence. quite specifically, what do diligence? >> market research was developed. >> is that available? does this have have it? >> we have turned over 35,000

pages of material. >> you are saying that what changed is additional information that was not available in january became available. is that correct? >> additional due diligence was done. >> that does not cut it. half a billion dollars that was not supported in january under the bush it ministration was supported conditionally in march. one thing change was the president. we know that change. >> i will have a to get back to you. due diligence is a generic term. >> the cover is very specific things. >> is a possible one of the

things that change was political influence? >> i do not think so. i was not there. >> no. and commented to the white house that this should go forward? there were no supporters that they step forward and had meetings tha? this was all done in a bubble top? >> i cannot speak to that. i was not there. the loan program career staff that did the work in 2008 under a republican report pointed ceo did under the same individual. >> is it typical of a loan guarantee that a project gets half a billion dollars and that that half a billion is 2/3 of the cost of the project? and that the federal obligation

is subordinated to the violation of federal law ind? >> it depends on the structure. >> they put together a deal. i thought we could have a legitimate project. >> it was deemed to be eligible. it went through legal and financial due diligence. it was deemed to be a potential process. >> >> thank you.

in 2005, congress passed the loan guarantee program to do this on a bipartisan basis. we wanted to move forward with the enterprises that would give us removable alternative energy rather than continue our reliance on fossil fuels. the idea of a loan guarantee is that we often borrow the money. when know there is an inherent risk in a new startup. isn't that correct? >> yes. they set it up to compensate for the lack of financing. there recognize the inherent risks by providing subsidies. >> no one wants to invest unless

they know it will return and give them a profit. the government has decided we will help visitors could start it. -- get started. it is important for our nation. >> we do not start these companies. the private company does. almost a billion dollars a private equity have gone into this company before the government loan. >> i was taken aback by the figure. between 1995 and 2010, the share of panels manufactured in the united states dropped from 40% to just six%. since 2005, china's market has increased from 6% 254%. half of them are not chinese.

rjr now chinese. we would like to compete as well. one of the reason china is maneuvering is because the government is putting a lot more money behind their solar energy industry. is the right? >> yes. china has committed $30 billion from a development bank. ofwe're providing by any way subsidies. >> at least. >> who would be against such a thing? this is competition for them. i think that is playing a part in some of the reactions i am hearing. what of the key issues of this investigation as identified by the chairman is whether d.o.e. ecb solyndra as a favor.

the administration gives "some of this money to people who were contributors are strong supporters." he implied the decision was based on political favoritism. before i ask you about these allegations, i want to give you a background about this guarantee. solyndra applied for this loan in 2006 when bush was president. d.o.e. document outlined the solyndra loan as one of the three highest priorities. all this took place during the bush administration. >> yes, sir. >> in fact, on january 5, 2009,

e-mail said "we think a public announcement would knowledge the hard work of the existing administration as well as benefits the fund-raising efforts for the equity contribution." in this evil, -- in this e-mail, they are talking about the bush administration. this kaiser group was not the only private investment. a lot of the investment came from another group. that is the walton family, they give to republicans. they were looking to invest in a loan that was given by the federal government. i would like to ask you about or interaction with mr. kaiser. his impact on this loan. did you or your staff have any interaction with mr. kaiser

related to the solyndra guaranteed? >> as i said before, i was not here at that time. i have never met or spoken to the man. >> same for me both personally and staff interaction. >> did either of you instruct anybody to restructure the loan because of the donations? >> no, sir. >> node. >> did anyone in the administration instruct you or your staff to restructure the loan guarantee because of the donations to the president? >> no, sir. >> are you aware of anything that would suggest that his donations to the president were a factor in determining whether to grant dp solyndra loan guarantee? >> i was not actively involved.

>> can you assure us that the decisions that were made on the merit -- >> it is my understanding that that is correct. >> our chairman has made some serious allegations. i think the real question is whether the vetting was done appropriately and whether it was done based on full representation by solyndra about their economic viability. i do not think we ought to use this failure of this particular guaranteed to discredit what is an important loan guarantee in order to be able to compete in this area with china and to move our country away from dependence on fossil fuel. >> the gentleman from texas is recognized for five minutes. >> we do want the availability

-- i look forward to the day where i can reduce my electricity bill by putting some type of solar panels on my roof or in my yard. have we advanced the that vision of the future with the activities that have occurred to in regards to this case? in particular, the jurisdictions for which you are responsible for, d.o.e. and omb. your testimony to us today to talk about pressure testing, i believe. we were talking about the enter agency discussions.

there are a lot of e-mails that have been produced to the committee and to the committee staff. going through those, we keep coming up against the notion that there was pressure. this was a pressure cooker. we have to get this thing out the door because we have a groundbreaking and it might involve a trip by the president. there was pressure, but it was pressure applied in pushing this thing out the door. was that the wrong kind of pressure to apply? >> could i get a copy? >> can we provide a copy of those e-mails? i think we are. i do not want to reference anyone's name because that is not appropriate. >> if i could be provided a copy of those e-mails, that would be

helpful. >> we will do it. >> they appear to be in the august timeframe. i am not an author of any of these e-mails. i was not actively involved. i will comment, but i do not know the intention of any specific e-mails. to ensure that an appropriate credit subsidies corps was given to the project. this is not about whether the loan should go forward, this is about accounting for the loan. there was some scheduling request from the office, interested and potentially being part of an announcement of the closing of the very first line. i want to be crystal clear as to my understanding.

those scheduling request had no impact whatsoever on the credit subsidies score that was given to this project. omb staff decided to increase the credit subsidies court to make it more conservative and d.o.e. agreed with that. the closing occurred after staff had done a thorough analysis and decided to increase the credit subsidy scored to make it more conservative. >> let me just reference august 27, 2009, 4:40 p.m. "as long as we make it crystal clear that this is only in the interest of time, there is no precedent set that i am ok with this, we also need to make sure that they not jam us on later

details." implying that there was pressure placed. >> not being involved, i think what is clear is that omb staff, based on my discussions, comfortable with the credit subsidy score and it was increased during the period of time. >> it does not sound like they were comparable. this time, we will let it go, but tell those guys over at d.o.e. that they will not jam us on this also. >> in preparation, i talk to the career staff and no one hesitated as to whether they were comfortable with the final determination for this project. the credit subsidy score was

made more conservative as a result of the analysis. d.o.e. agree with that. >> let me ask you -- this is the filing with the sec on the report from march 2010. on the planned ipo. the company has suffered recurring losses, negative cash flow since inception. did this prompt any curiosity on your part? and did it change anything about the behavior? >> as a former venture capitalist, frequently, companies will make filings

while they are growing rapidly. and a review by an independent auditor is a that kind of scenario. >> i will run out of time. the enter capital is different from a taxpayer subsidy. this is a different universe. your response as a venture- capital list is not consistent with being a good steward of the taxpayers' money. >> the gentleman yield back. >> recognize the chairman of the energy and commerce committee. the gentleman from michigan. >> thank you, mr. chairman. i am very pleased to see that we are having proper oversight. it is my hope that as the go forward, if the majority has evidence of wrongdoing, they will present it to us so they

can -- so we can take action. solyndra first applied in 2006 when president bush was still in office is that correct? >> yes, sir. i understand that you have people that work would then allow an office and do the due diligence. are these people political appointees? >> no, sir. >> they are career. >> and analysts and advisers. >> >> is it your assessment that

it was awarded based upon the project proposal and not on any political influence? you are under oath. >> to the best of my knowledge, yes. >> ok. non-political career department of energy employees recommended a timetable to ward's solyndra a guaranteed loan. >> the career staff identified the time frame after having brought it forward in the first credit committee and produced at that time, yes. >> let's fast-forward to the year 2010 when solyndra approached the department of energy for further assistance. was this is due to low-cost competition from chinese manufacturers? they needed help. if your office did not agree to restructure the loan, would they have gone bankrupt in 2010?

>> yes. >> without the restructured along, would they have had any chance of success? >> it is hard to imagine how -- they were out of operating capital. >> would the company's 1100 workers been laid off in 2010? >> i assume so, yes. >> is it's a standard for new investment to have priority? >> it is very typical. >> mr. chairman, i have been waiting anxiously to hear what we have to show that there is wrongdoing. i am still waiting to see something that makes me be concerned that we have some wrongdoing. i do not want us to proceed just on suspicions or doubtful

questions or misinterpretations of e-mails or finding e-mails were not exist. let's try to see what took place. during the bush administration, solyndra submitted an application for a loan guarantee. in a financial technical review were conducted. in october, the department of energy insights solyndra and 15 other applications to submit to full applications. solyndra submitted their equal application and 2008. the department of energy indicated that they were in the best position to receive the first loan guarantees. in january of 2009, during the final days of the bush administration, the department said 40 timeline to complete due diligence on the application. next, the administration of

president obama. during that spring of 2009, the department continued to do its due diligence and completed its work. the loan guarantee was issued in september 2009, three years after the application was originally submitted. i am looking forward to hearing from the committee leadership, is there anything on record that suggest that this proposal was rushed through or improper consideration was given or that there was any improper or illegal presser or political activity which might have led to us being where we are today? i would urge my colleagues to look hard for the facts and take all the facts into consideration and. as they go about our business, we are careful in finding the truth and not just having a splendid time making accusations

regarding the program and the administration. thank you. >> time has expired. i recognize the gentleman from nebraska. >> thank you. i would agree with the gentlemen that we do need to do our due diligence and find out on behalf of the taxpayers, what went wrong. that does need to be our ultimate mission. there is a thing that i am picking up in the questioning. i think everyone must agree that there is some scandal involved in this. i am reaching that conclusion by the amount of time spent to ensure that people believe that this was somehow approved and all the work done under the bush

administration. that seems to be mo. if there is a crisis, blame it on the past administration. just to set some facts straight, you mentioned in your written testimony provided to us that solyndra submitted its initial application in 2006. most of the diligence on the transaction was conducted between 2006 and 2008. unrepeatable fact is that on january 9, 2011, the bush administration d.o.e. committee remand the application, calling it premature and citing the unresolved issues. it seems to me that not all of the extensive due diligence was

on the transaction was conducted between 2006 and two dozen 8, but that the bush to administration said very -- 2008, but that the bush administration said the application required more due diligence. then you said, in 2011, more do diligence was done. that led to the approval. is that a correct statement? >> i believe that you mean 2009, commerce and. -- congressman. >> yes. >> additional diligence was down from the time the initial credit committee remanded back to the long program efforts through to the next credit committee which met in march. during that time, additional work on market research and other kinds of things that would normally make up the responses

to the questions that the credit committee had asked were developed and answered. >> after the president was inaugurated, an e-mail from a d.o.e. states that we are approaching the beginning of the approval process again. the work continued on the application, correct? >> yes. that is my understanding. >> what we would like to know is -- he asked in a way that major responsible for assuming motives of other people. i would just ask you point blank. after you started your role at d.o.e., did you received any

communications from a white house employees, a personnel, at anybody regarding the solyndra loan? >> when i joined? >> yes or no? >> the solyndra was closed in september and i arrived in november. >> what about the restructuring? >> the restructuring occurred a year later. it was largely conducted on a staff to stop basis. there were interactions -- >> if you are denying that you received any communication directly from the white house to you -- >> what i am trying to describe to you --

>> that is my question. that is an easy question. >> it has an easy answer. we work of regularly on this transaction and every other transaction with or enter agencies colleagues at omb. >> i said white house. >> we work with the omb. >> do you want me to start naming individuals? did you received any communications -- i think the question is fairly clear. >> you are under oath and he has asked you a question. >> we interact with different agencies. the question is yes. >> i did not say different agencies. i said the white house. >> individuals in those agencies. >> so you did receive communication directly to you from somebody in the white

house? >> i do not recall who would have been involved directly. what i can tell you is that the discussions around these transactions are conducted on a staff to staff basis working to develop the transaction. >> once again, have you received -- you -- received any communications regarding the solyndra loan from anyone from the white house? >> [unintelligible] >> obviously, he is not going to answer the question. >> i was not involved with the loan. the loan was closed. after the restructuring, i do interact with component of the white house.

i want to draw the distinction between omb and the white house. to get their expertise on the energy and financial markets. >> who was the person that you were communicating with and the white house? >> the primary expertise are decided at the time at the office of energy and climate control. >> did they suggest to you -- my time is up. >> to buy, gentlemen. the dumb and from massachusetts -- thank you, a gentleman. >> the gentleman from massachusetts is recognized. >> if you want to waste american taxpayer's dollar, let's talk about the oil industry. if you want to talk about loan guarantees, the southern company has received a loan guarantee 15 times larger than solyndra.

let's have that hearing. that money is in jeopardy, if you are really concerned. we know we will never had a hearing on the oil industry or the nuclear industry. this is all part of an agenda that deals with the solar industry. let's go back in time. it is back in 2009. you are looking at this loan guarantee. what does the market look like for solar? >> although i was not at the department in 2009, i do have a point of view. prices were extraordinarily high. the balance of system's cost of putting solar paddling on bruce, which involves a penetrating the roots, -- putting solar paneling

on groups, it it received a lot of attention and it was particularly innovative because it addressed both problems. >> in general, you are not providing financing to fortune 500 companies. you are providing financing to companies that are largely start-ups. is that not correct? >> that is correct. with the added edition that companies themselves are required to raise substantial amounts of capital. solyndra already raised hundreds of millions of dollars. >> when they were being provided, did your agency or any part of the federal government projects a 42% drop in the price of solar panel prices? >> not only did they not predict a 42% drop this year, but between 2008 and nine -- and now, that price has dropped 80%.

>> so we can have an honest discussion. every time there is a doubling of solar panels a worldwide, the cost of producing them goes down by 18%. that phenomenon has become very predictable. into those 11, -- in 2011, we can see the forest for the trees. the chinese funded $20 billion to solar companies in 2010. we have seen a 42% collapse in the price of the solar panels. was that foreseeable in 2009? >> it was not. china's commitment to this was increasingly clear and i believe that number is closer to $30

billion. >> did anyone in the marketplace predict the 42% drop in the price? >> i cannot speak for every analyst, but many professionals were surprised. >> evergreen went bankrupt this year. german solar shot down their arizona solar facility. bp solar shut down their facility in frederick, maryland. this 42% drop this year is as a result of the chinese intervention in this market. this was not noble in 2009. this was not noble in 2010. this was a market intervention. if the republicans think that

there is an envelope would be answered and it that was available in 2009, they're kidding themselves. we are in a global race. we are doing our best to make this case to the republicans on this committee. they keep the loan guarantees before nuclear intact as they pass their budget. they continue to protect oil companies tax breaks. they are trying to pin a collapsing markets on something that is related to the fact that we are not focusing on the chinese intervention into this marketplace. i did hope that the administration and the policies of financing these programs, it has been a big success story and we have to keep that in mind.

thank you, mr. chairman. >> mr. sullivan is recognized for five minutes. >> i appreciate you hold in this. mr. silver, on january 9, a 2009, the credit committee found the deal to be premature and stopped all further work. an e-mail sent by a d.o.e. a few days later stated that it was the unanimous decision not to engage in further discussions with solyndra at this time. yet on january 26, 2009, after the obama administration came in, a staffer notes in an e-mail that d.o.e. has decided to restart the approval process. what prompted this decision? >> since i was not there, i can

only give you my review of the record. when the first credits committee remanded the debt, they said, we have specific questions we need answered before we can take this application up. the career staff went to work answering those questions and when they had been resolved, brought the transaction forward again. >> this was about two weeks before the stimulus was signed into law. did that have something to do that? >> not to my knowledge, no. >> secretary directed d.o.e. to accelerate the process. is that right? >> i do not know what the secretary said. the recovery act had a focus on bringing projects forward quickly. there is a sunset date to get this project done. a lot of work has gone into this and other programs to move

money. i assume that to be true, but i was not there. >> you say yes? >> i assume that to be the case. >> what d.o.e. did to accelerate the process? >> there were not during many people there. >> how many employees? >> i do not know. i believe it was between 10 and 20. >> did they even have the resources to do the review? >> yes. along programs professionals make use of outside advisers as well. >> want to resolve -- i want to resolve the discrepancy. in your testimony, had been

developed under the bush administration. which is it? can you clarify? >> i do not think those two statements are incompatible. the career staff in the loan programs office identified the march timeframe as when they would come back to the credit committee when the proposal was originally sent back to them. >> you mentioned earlier that you work in private equity. >> a bit of everything. >> you have looked at businesses and you have seen whether they were worthy are not. in that capacity, would you lend half a billion dollars to this company? >> i am by training and background a venture capitalist and a hedge fund investor. i'm in no position to second- guess what the transaction -- what i can tell a duke is extensive due diligence was done

across multiple years on call all the relevant characteristics that would go into a typical financing. >> if we could look at slide 10. i would like to ask you about this. given the time pressures to sign off on solyndra, we do not have time to change this model. as long as we make it crystal clear that this was only in the interest of time and there was no precedent, i am ok with it. we also need to make sure they do not jam us on later deal so there is not time to negotiate. this was on august 27. joe biden was to do an appearance very soon after that. the stimulus was done on september 1. what do you have to say about this? >> i was not involved. based on what is on the screen, i think this has to do with the

closing of the transaction. sure that is to make the credit subsidies scorer is correct. it is not about the loan over all. it is about the credit subsidy score. my understanding, having talked to staff, is that staff was very comfortable and had no hesitation as to its final determination of the credit subsidies court. as i mentioned earlier, this court was increased as a result of their analysis. d.o.e. concurred with that. it was made more conservative. >> you said there was a problem with the model. is that a problem? >> again, not having been there

-- i have talked to omb career staff. there was no hesitation as to whether the score was one they were comfortable with. it was increased as a result of the analysis. >> the gentleman's time has expired. >> i want to thank our ranking members for insisting that we hear from the solyndra officials. my reading of the testimony suggested that d.o.e. and omb appeared to have done due diligence. part of the collapse appears to be due to forces beyond their control. i also think it is important that we except that innovation

carry some degree of risk and it is important that we not use the failure in this instance as an excuse to turn away from the pursuit of green energy and the u.s. leadership in this area. my question -- let me start. i would like to ask you to take me through the monitoring system. i do want to point out that a series of the inspector general reports have identified problems with management and controls with the guarantee program. these programs did not begin with you. it is important to ensure accountability for how these programs are run. after the solyndra loan guarantee was first closed in 2009, what mechanism did d.o.e.

used to monitor the cash flow? >> in addition to our origination teams, our credit teams, our legal teams, we also have a portfolio management group. their responsibility is to monitor transactions post- closing against the covenants in each individual transaction. >> site visits to california? >> there are regular site visits. >> how did it change with the lawn was restructured in 2011? >> the principal difference was that in addition to picking of certain additional collateral, we negotiated and took an observer's seat on this particular transaction. i should say that that is an unusual thing to do and to have. typically, lenders do not have

observers see it, but we thought it was important to do that. >> despite the ongoing monitoring, it does not appear that d.o.e. anticipated the financial troubles. mr. silver, how would you explain that you were not able to anticipate the financial troubles? >> as several members have mentioned, the precipitous price drop of solar panel prices has contributed to that. i should note that we anticipated there would need to be additional support for this company as it continued to grow. that was built into the destruction transaction. >> -- that was built in to the transaction. do you know why this occurred? >> i have no idea.

i am not part of that investigation. >> did solyndra ever misleads d.o.e.? >> i have no reason to believe that we were misled. >> what lessons have you learned? how bill loan monitoring practices change? do anticipate making further changes as a result of the bankruptcy? >> the entire program has changed. when i got there, there were about 35 people. we now have between 1008200 people -- 100 and -- 180 and 200 people. applicants are able to submit electronically. we want -- we won a national

award for that software. we have a complete records management piece. we will continue to make additional improvement as we can. >> thank you for this informations. one of the key roles be to understand why d.o.e. did not see the bankruptcy earlier. you have helped us with some information earlier. whether there are ways to improve the system. thank you for your responses. >> thank you, mr. chairman. thank you built for being here. just a couple of questions. i know you have been here for quite a while. i have an e-mail. mr. silver, you said you had worked on wall street. >> i did not work on wall street. >> for a hedge fund, okay. you are pretty used to reviewing

companies am looking at the history of companies and deciding if something is going to be a good investment or not. correct? >> yes. >> i would imagine that d.o.e. had a file that was passed on to you when you came into your position. was there a file that contained the different loans that had been approved and the tracking and the accountability to the taxpayer? we are about fairness for the taxpayer. >> as are we, and yes, there were files. >> ok. did you get a file at omb on solyndra? >> i became involved with solyndra around the period dove destruction. >> not the question. did you receive a file that was back today when? >> no. but still had no knowledge of the history?

is specifically on fcra. >> not my question. was there some history of the progress? >> i was briefed by our staff on the history. >> but nothing in writing? >> i reviewed the document that stopped produced. not one comprehensive file. >> there is solyndra no loan guarantee file at omb. >> my assumption is that the career staff maintains a file. >> there are 2 e-mails. let's talk about these. the first and, august 19, an e- mail between d.o.e. staff, "we still have a major outstanding issue, the issue of working

capital assumption." mr. silver, i assume you know something about that. let's look at the next day. no one seemed to be -- it looks like we might have had somebody that was doing a little bit of looking ahead. let's talk about this. that e-mail says the issue of working capital remains unresolved. the issue is cash balances, not cost. solyndra seems to agree that the model runs out of cash in 2011. this is a liquidity issue. mr. silver, what do you say to that? >> that would not be surprising.

that is what you use modeling to do. >> have you ever seen this e- mail? >> i have not seen this. >> this is the first time you have seen this e-mail? were you aware that the liquidity issue had read them. -- rhythm. was that and the file? >> i do not remember. >> remember, you are under oath. >> i arrived in november of 2009. since evelyn was already issued, we moved in and -- since evelyn was already issued, we move into a position where we are managing along. >> i appreciate that. my assumption would be -- my goodness, if we had a loan guarantee program going into different agencies and there is not a comprehensive file, that

would show the due diligence, document this comment that would show the orderly process that was followed. my goodness, we should be reviewing every one of these loan programs. is omb not looking at this at a comprehensive basis? let's look at the rest of this e-mail. >> it generates a working capital shortfall of 50 million went working capital assumptions

are entered into this model. that was the question that was passed. to all of my colleagues, i think that when you look at this and you see that someone at d.o.e. was asking those questions, it should cause us to seek to do a little more review. >> i agree that we should closely examine what went wrong and how the process can be improved. i am very concerned here about this is an attack on a program that when you invest and

various innovative technology, is it not true, mr. silver, that there is some inherent risk associated with each of these deals? not just with solyndra? >> in building, that innovation at scale, there is an old adage that every banks want to be the first bank to be your second line. the program is intended to be the first bank to the first loan. >> my colleagues want to make this a political issue, but they also talk about not wanting to pick winners and losers. we areven's sakes, investing right now billions of

dollars in a oil and gas companies. we are investing in a questionable technology, risky technology called nuclear. i want to know that in selecting projects, what steps have been taken to make sure you have properly diversified our portfolio? >> thank you for the question. the loan guarantee program does not perceive itself to be in the business of picking winners and losers. the marketplace is the place to do that. as someone who has come directly from that, i support that. we do not look at projects that have not already garnered or will attract substantial private capital. private capital is one of the bedrock requirements for the issuance of a loan guarantee. the question is not really so

much are we picking losers and winners. we invest across a diversified portfolio. we invest in the wind, solar, geothermal. it is the program of objective, mandate, to introduce a wide range of innovative technologies so that the marketplace can replicate them on their own. when the markets are in those areas, we exit. the real issue is how are we going to -- if we are not going to substantially -- significant participants in this, how will we build these american companies at all? china and the rest of the world are spending billions of dollars to build up these industries. >> you know, september 2, 2011 -- this program should be judged based on its entire portfolio as

opposed to what individual alone. i wonder if you could talk about that. but this particular loan in context comment either one of you. >> absolutely. we have invested in a wide range of technologies. the vast majority of our investment have been in generation projects, rather than in manufacturing projects. generation projects have agreements through power purchase agreement with utilities. the power grid that is being created is already contacted. the generation projects have a vastly different risk profile than manufacturing projects. the only done it for manufacturing projects in the 40 projects we have done. >> what would be the consequences if this

investigation ended up in a conclusion that making investments in companies that do alternative energy, but with the consequences for our country be if we were to divest of those kinds of loans? >> the consequence would be profound and they would be profoundly negative. we're competing with countries around the world to see this as one of the largest industrial sectors and opportunities of the next generation. if we walk off the field, there is no way that we can succeed. these industries are different than the software industry. you need platform companies in order to be able to succeed. as i pointed out earlier, five of the largest solar panel companies are in china.

7 art in asia. the eighth is in europe. you need to deploy commercially because that is how you build up the supply chains. you have to create demand pull. if you do not do that, you cannot keep those supply chains alive. they cannot reduce their costs. we have under invested and supply chains for decades. we are only now beginning to catch up. >> thank you. thank you for your work. >> thank you. >> the gentleman from georgia is recognized for five minutes. >> i want to make a statement in regard to a couple of my colleagues on the other side of the aisle. comparing solyndra to the southern company. i take little exception to that comparison.

southern company owns mississippi power, alabama power, a georgia power, and employs thousands of people. it is closely regulated by the georgia public service commission. it has three nuclear power facilities. this loan guarantee by the southern company, comparing that to this loan guarantee for a company like solyndra is a little disingenuous. let me go ahead and start the questions with you mr. silver. when he met with committee staff, it you represented that the restructuring agreement had position to the united states taxpayer for maximum recovery.

the company is now bankrupt, and it turns out the government is now in a second position to the investors and the deal. those that put up an additional $75 million. why did they allow solyndra investors to be first in line to recovered? isn't your number one duty to protect the taxpayer? >> it is absolutely one of our concerns to focus as much as we can on the security of the taxpayer monies. that is why we reached the decision we did. a restructuring is always, by definition, a decision on on a set of tough choices. it means a company is struggling. the fundamental question that we were trying to answer -- >> let me interrupt you. if you have the legal authority to make those tough choices, the

energy policy act of 2005 states open " the obligation shall be subject to the condition that is not supported to other financing. " this language makes congress intent seem pretty clear to me. to protect the taxpayers' money. isn't this exactly what the restructuring dead? make the taxpayers' interest subject to other financing. doesn't the restructuring of violate the law? but congressman, i am not a lawyer. the decision was reviewed by d.o.e. and omb council. the conclusion of that analysis was that projects needed to have senior secured position at issue once. i will tell you that as a businessman, and if you do not pretend to restructurings of

transactions -- permit restructurings of transactions, lenders will be -- >> let me interrupt. i understand that. in this particular instance, you said you received a legal memorandum on d.o.e.'s interpretation of the energy policy act. correct? >> they all reviewed this matter. >> who reviewed the memorandum? >> which lawyers? i am not sure. >> it was approved by the general counsel, you just do not know what lawyers. it was approved by the general counsel? >> it was certainly reviewed. >> i want to discuss one part of the legal opinion. please put the language on the statute on the screen.

i believe that it slide number one. look at what it says. let me read it to you. number three, subordination. the obligation shall be subject to the condition that the obligation is not supported to other financing. that is part of the industry policy act of 2005. the d.o.e. legal opinion seems to be based on the word "is." "the reading of the provision is reinforced by the world use of the word 'is'." you cannot subordinate when the guarantee is issued, but you cannot restructuring. are you basing the opinion that taxpayers can be second in line

to investors based on what the meaning is -- of "is" is? isn't it exactly the opposite of that plan language? >> i am not a lawyer. i'd relied on the council's judgment on that. >> i think you got bad advice. >> the gentleman from texas is recognized for five minutes. >> i am shocked my republican colleagues to be concerned about something coming from a private sector to the government payroll. i thought that is what we needed more focused on the private sector. i do not like wheeling and dealing either, but it sounds terrible when you hear it. i want to ask some questions about that restructuring.

the investigation revealed that there appears to open to a major legal questions. the first was the extent that the d.o.e. had the authority and the second was whether the restructuring should be considered. mr. silver, what does that mean to subordinates and interest? >> it means that new capital would be in a prime position on exit depending on the structure. i might point out that typically, in a restructuring, why would any capital come into a troubled situation if they did not come in a prime position? typically, in the private sector, the prime trumps other

subordinated capital. we were able to ensure that it was only in the event of liquidation. in the event that the company is sold as a turnkey operation, it will not be in a senior position. >> there is language in sec didn't -- and section 17 that my colleague pointed out. the obligation shall be subject to the condition that the obligation is not subordinate to other financing. your legal staff there was an interest. can you describe your staffs legal rationale? >> yes. as best i can. the judgment was made at the law required that the loan issuance be in a secured position. i want to assure the committee

as all the transactions we are. in the event that a project struggled to and there were is no surprise to the fact that projects struggle, we had the authority to figure out other solutions. i should remind the committee that absent the ability to do this, this company would have closed with solomon hundred jobs lost in the likelihood of any real recovery to the taxpayer being at a minimum. at the time the loan was restructured although the physical building had been built, the plant had not been fitted. it is an average of a project financed that the value of a completed project is greater than an incomplete project. >> key documents provided suggest that your staff had concerns about this approach. you did not step in and stopped them from subordinating the

interests. why not? >> staff and lawyers and determine -- >> i keep hearing you're not a lawyer. it does not show anything on common sense. >> the determination was the approach was a reasonable , wants to make it clear that the billion dollars of private equity that went into this company is wiped out in that scenario. we're not talking about all of that private capital. just the newest piece of money they came in in order to provide the company with a chance to restructure. >> the second issued was whether it was a modification of the loan agreement. my understanding is that it

prohibits all modifications that increase taxpayer costs. the definition does not include a restructuring to workout a troubled loan. is that correct? >> this situation was deemed a work around. first, the company was in imminent default. second, it was in the best interest of taxpayers to restructure the loan as opposed to liquidation. when those conditions are met, a loan is considered a workout. >> so it was a workout and not a modification. what was the rationale for determining to restructure and not modified? >> exactly as we have indicated. >> your staff is also expressing concern that the restructuring

constituted -- order analysis did you go through to determine their not illegal modifications of the loan? >> when we first heard about the financial troubles the staff orientation was going to be there could be a modification. as we worked to understand the financial situation and the fact the company was in imminent analysisand that doe's was reasonable, omb determined that it was a workout. >> the gentleman from pennsylvania, mr. murphy. >> i want to get a couple of things on this in terms of your expertise. had you ever managed something of this size? >> core capital partners was a venture fund. we provided equity.

not in a loan of this size. >> at tiger management? >> yes. >> you are used to reviewing these things. i go back to on a slide 5, when they had in august of 2009 someone wrote this -- i cannot read this. in terms of saying that some issues with regard to the concern about the health of the company, major outstanding issues. any now says the issue remains unresolved. the model runs out of cash in september even in the best case without any stress. when did you become aware of that the noun? >> i have not seen this e-mail.

it was written in august of 2009. i arrived in november. there would have been no reason for me to know of its existence. >> you did not know of anybody is concern that there was not enough capital? >> career staff was aware of the issues. >> your job is to recite? >> euros -- you're not aware of a memo saying they did not have the money to keep going? >> i was aware of the staff situation. >> yet things are going through. >> alone had already gone through. >> as we are looking at this and with the move forward to restructuring, the -- >> and maybe i should clarify what the loan was for. we provided a loan guarantee to support the construction of a physical plant called the fab two.

that was what colonus for. it was improved in september. that was delivered on time and on budget. the way it alone -- >> for a company that could not function regardless of what they had. >> that does not say the company cannot function. that says there will be a liquidity issue -- >> meaning they ran out of money. >> meaning they will have to address that issue. >> i'm trying to establish, you handle loans like this. would you offer a loan to accompany the says it will not have the money to pay it back? >> i was not there when this loan was issued -- >> in a time yet been there, you were aware. i want you to stop throwing everybody else under the bus. i hear you throwing your staff

under the bus. you are in charge. now you're saying it is everybody else's fault. you tell me which you did with half a billion dollars of taxpayer money now saying it is all my staff's fault. i did not know. watery going to tell the taxpayers? we're in a hole for some much money and you're dealing this in a cavalier way. whose fault is it? >> let me say that the 200 professionals working are exceptional professional. >> you throw them under the bus but you are the driver. going back to a slide the sash is the obligation is subject to the condition that is not supported to other financing and now gets restructure its attacks appears to not get their money back. >> any restructuring is based on a decision as to what is the better outcome for recovery.

or a restructuring. >> soon made the decision -- who made the decision that this was not going to be adhered to? >> it was -- >> we're throwing him under the bus. >> i am not a lawyer. >> did the secretary of energy have anything to do with this? >> not to my knowledge. >> so no one is responsible. this is an incredible burke -- organization. this is phenomenal. what did you do for a living? if you do not know what is happening and everyone else is to blame, what do we tell our constituents who work hard. with so many people in poverty, we say we do not take any responsibility. it is everybody else's fault. >> we work to ensure that these projects --

>> i understand. now the taxpayers are on the hook. >> as was pointed out earlier, there are always challenges investing. congress, through the appropriation, -- >> when did this company get their check? >> it does not work like that. >> you could have stopped it when you found the information that they could not exist. that was under your watch. >> our transaction, our loan was for the construction of a physical plant. >> when you realize they could not function, that is when you take leadership and stop throwing your staff under the bus. >> the question mr. murphy is asking, should someone be fired? should anybody be fired? >> the people in the loan guarantee program have worked -- >> you're saying no one should be fired.

>> i am saying we are doing the best job we know how to do. >> binder stand. the gentleman from virginia is recognized for five minutes. >> if we can have slide one again. i am concerned about this situation. in paragraphs 1 and 2, it references that no guarantee shall be made unless -- in paragraph 3, this is the obligation shall be subject to the obligation not subordinate to other financing. have you read the memorandum law on this? >> i have not read a. >> would it shock you to know that if you pay attention to what is being said, i can give you my copy with my notes on them. it looks like it is a law school project for you come up with unanswered. here is a question. defended the best it can.

under this analysis, it says that if we close alone in the morning and at lunch somebody says i think we should see if we can get more money from somebody else, we're not going to follow this paragraph. is there is no line. somebody raised that issue. should there be a line and between when the loan is granted and a possible default. you can change the law any time you want to. does that make common sense? you do not have to be a lawyer to know. does it make sense of the congress is responsible for setting our legislative policy would say you're not to subordinate. under the interpretation they can subordinated over lunch. does that make common sense to you? >> what makes sense to me is to

ensure we have the tools available to do whatever is necessary in a troubled situation to secure the taxpayers' interest. >> that even if it is in violation of the law. common english always trumps legal mumbo jumbo. common english makes clear you're not to subordinate. when you were a help your people subordinated $75 billion to private investors. they're going to invest more money in august. >> that is true. >> they did not do so. when did your observers tell you they were not going to invest any more money see might have been able to anticipate the same courtesy? >> late july. >> or pre trying to get information from you all that time? >> i do not know what you're referring to.

and we sent you 35,000 pages of material. >> just so we know, you have all these other loans which are in a similar situation, have the subordinated that money? >> i would say that of the two deals that have closed and completed construction, both of those are repaying on a timely basis. >> attached to the memorandum there are charts on how they're going to make money. did you look at those charts? >> i have seen the financials. >> you testified that part of the reasons the lender went under is the chinese were able to make their product cheaper and the europeans stopped buying. wasn't that also true in january? >> it has been true for the past several years. >> when you look at these

numbers, how if you know that, how could you anticipate that profits of solyndra would double next year? >> i will leave it to the management team to discuss their financial projections. >> you were concerned enough to put a stop -- an observer on the board. doesn't that sound like it is not common sense? >> with all due respect, revenues are not the driver of how a loan guarantee would get paid. we focus on cash flows. those can be managed in a variety of ways. >> you would acknowledge that if there model was a week to begin with. i recognize there is risk. if there model was week to begin with than the market gets worse, doesn't that mean we should have not thrown good money after bad? we are in a worse position to

get our money back. >> at the time -- >> are we worse than if we had let them go into bankruptcy last january? >> not necessarily. that will depend on the outcome of the bankruptcy. when you are looking at this issue and admitting there are no good choices, one choice is liquidation. >> is a bankruptcy a good thing? >> it is not. ipad " -- >> i agree with you. >> the gentleman from california is recognized for five minutes. >> i would like to address the ranking member of this committee. i hope she recognizes this is not a democrat or republican issue. this is a threat to the legislative cross has. when you can have an attorney

play this game. if that means democrats or republican one day direct legislation that we have to say not only it will not happen but we must say it will never be allowed to happen, and we have to play this word game. i think this is an issue about the law. i do not care how convoluted an attorney wants to do it. this is not passed. i think this is an affront on both sides of the aisle by this manipulation. we tried to get the job done and we crossed a line. it to a common sense person, they would say you crossed a line. there's a lot of people talking about solar power. some of us have worked in that. are you comfortable with the technology chosen by this company? did you have any concerns about

and using this technology? >> i am not a solar technical analyst, but i am highly comfortable with the fact that the solar experts at the department of energy and the independent engineers which were well known firms were qualified. >> there have been more false starts than any other form of that protection? >> i do not know that to be true or not. >> china has concentrated extensively in pauley crystal technology. >> china has focused on the market segment because it is a very cost-effective way to mass produce those panels. solyndra technology was designed to overcome a 2 fundamental challenges. the high price of silicon --

>> and they also have a lack of durability and a loss of proficiency as opposed to other technologies. you are a businessman. you are looking at a company. do you review their proposal for the construction of their factory, the technology, the plan, development, and its related costs and oversight. >> what is the question? >> how they were building it, other related issues of the cost of building the factory. >> the loan was issued before i arrive to. >> when you renegotiated, did you look at what was being proposed to? >> the plant was built. >> did anybody down the line raise the issue that the proposal was to build a facility in the state of california? can you think of anywhere in

america where you probably have more regulatory obstruction to the construction of a factory? >> i am not qualified to answer that question. the investors that back to this company in the management team that led it must have concluded this was the right place to do it. >> are you aware of anybody that has notified applicants that if they want to get a grant addition moved out of california into a state with less regulatory obstructionism? >> i am not aware of that. >> maybe we ought to talk about the fact that -- this application which asking to take 30 acres of agricultural land. it was going to be required to be able to go the environmental

quality act, getting a permit from the city, their quality from the bay area which is a non-attainment area. it was going to require a general permit which means that not only did you of the environmental agencies involved, the state water quality control board, you have the local control board that you had to get a permit from. the california department of occupational safety and has summoned the most restrictive regulations in the world. we had to get a permit from them. you has hazardous-waste which california has some of the most restrictive funds. then you get into waste water. these are some of the permits down the line. nobody in your department raised the issue that this is not only a terrible place to try to find a facility, why build a new

facility rather than moving into an existing facility in a state with huge empty resources? anybody talk about the question of why would you build a new facility when their warehouse is available? mr. chairman? >> time has expired. your welcome to answer the question. >> at risk of repeating myself, i was not there. i can tell you that applicants for loan guarantees are required to have all of their permits in place by the time the project is undertaken. >> when they get into it. somebody with siding, it is absurd with the kind of a vacancy we have for anybody to

talk about or to come to you and say we want to build a new area on ag land. >> the gentleman from louisiana is recognized for five minutes. >> thank you. thank you for calling this hearing. we have been pressing on this issue and asking a lot of questions about this loan program for months. i think it is important that we have this hearing now. while solyndra was touted as one of the poster child of president obama of his first stimulus bill. there's a lot of evidence this shows this was something the white house wanted to move through quickly. while this was one of the poster child is -- poster children of the first bill, the president is counting when i call a son of stimulus. another bill to spend more money to do more things like

this. if you look at some of the issues we have raised about this program, some of these projects, just solyndra alone was touted to create jobs. a lot of us are questioning this kind of debt double down son of stimulus approach where they're going to do more of this same failed policy of spending money we do not have. the president said, passed the bill now. we had not seen the bill. he did not give us the tax sinise said to pass it. he called on the american people. i hope you understand why all lot of us are skeptical when the president says pass the bill now. we see the failure of the stimulus bill. he did that with health care. when the president says pass a bill you can wonder why somebody wants to read a first and look

at the details. now when we get to this issue of solyndra, you testified you were not in your position until november 2009. you acknowledge there was a file on solyndra. >> i read through all of the materials when i arrived. >> did you see the concerns being raised by your own agency back and prior to your coming that solyndra could go bankrupt by september 2011? >> i saw all of the materials related to the discussions. i need to reemphasize that the loan guarantee was for the construction of a physical factory which was stunned. >> it is your job to go through that a loan guarantee and see if there are things that meet the taxpayer interests. if you also needs to be aware of the way the program is being

implemented. after you came in, there was a report and that was pretty scathing about the loan program. they made recommendations. they pointed out problems. after you came in, they pointed out that the loan program treated applicants into is this -- inconsistently. they gave examples. did you read this report? >> if you'll give me a minute to respond. >> i cannot give you that long. >> while the report came out after i arrived, it covers the 2008 time period. >> did you make any changes based on the problems? >> we made substantial changes. >> let me ask you on the actual -- you were here. you were in your position after y'all did the restructuring of solyndra's loan.

who put the taxpayers in the back of the loan? >> as i've said, i do not know it was in violation of law. >> someone made the decision. >> there were a variety of legal -- >> did you make it to? >> the loan program -- >> it's a yes or no question. did you make a decision to subordinate the taxpayers when the decision was made to restructure? >> the question does not have a yes or no answer. >> you either made the decision or you didn't. i think it is straightforward. we have been asking for months. we ask your agency for some of these documents prior to the modification of the lawn. prior to restructuring. stonewalled us.

to have maybe if you would have given us that information months ago when we ask for it. the taxpayers would not be at the back of the line today. you would understand why we are asking who made the decision? can you get me that information. >> i am happy to meet with you to describe -- >> i want it in writing. i'm going to ask if you can get as the names of the people and the decision making process. who made the decision to put the taxpayers in the back of the line? in violation of the law. i do not know where your council thinks. your council may be part of this list. i want to know if you are part of the list. i want to know anyone in the white house is part of that chain and said we're going to subordinates denied -- taxpayers in restructuring this long. we deserve that answer.

somebody made that decision pureed or multiple people. nobody made it. the decision was made. would you get that information to this committee? >> we will provide what you need. >> the gentleman from colorado. >> thank you. thank you for your time. i would yield 30 seconds to my colleague from california. >> my biggest concern is -- as someone who supports solar energy. we have to keep the science and not a blind faith. it appears that this process was written by an assumption that anything solar was good. you could force it through and it would work out. the lack of critical review it is the greatest threat for feature solar. it is this kind of blind faith we have to avoid. it has to be driven by science and good investment and not by

an assumption that renewable is great. this failure was driven by that. i do not think there was criminal intent. the trouble is, with this kind of prejudice for a technology blindly, there is more a threat to that happening in the future. not just financially but the energy independence of this country. >> and i agree with you that we ought to back the science which is why a large group of investors who have done their own due diligence, why the loan program staff from 2007-2009 timeframe and the solar experts came to that conclusion. >> the record shows there was political interjection. there were preconceived ideas that if the was solar it had to be a great package. there was good stuff and bad

step. the creature itself is the garbage. being treated as if it was sacred spirit it is not critical -- sacred. it is the critical enough. >> thank you. i want to go back to the issue of the e-mails and the approval comment dismissal project approval, and dismissal of this project. -- i want to go back to the issue of the e-mails and the approval, dismissal of the project. you said this was over nothing big. >> i never did say that. committeee credit comm remanded in back. if i may. >> let me just talk about this. >> i would like to 0.1 other thing.

>> this is my turn. what you said due diligence took place over -- let me read this to you. there is not an independent market study addressing longer- term prospects are the specific company. they raise the issue of obsolescence and the market. it is important to have an independent market. while the agreement is said to be analyzed, the committee did not have access. there are questions regarding the guarantee for the guarantee. there is concern with this. this was an an e-mail on january 9. this is the due diligence he said he did by january 26, and

monday. >> i do not know what dates you are referring to. >> no. said no we're not going to do that. >> does the gentleman have copies of that ta? >> we do not have copies. >> the credit committee sent an e-mail. you can see what i am talking about. january 26 we are approaching this. >> this is not accurate. if you'll give me just a moment to try to answer this question. there is an extended amount of due diligence that takes place. to the first committee met.

there's a month before and met again. i need to make sure this is clear. i do not think it is. what gets approved at that juncture is a conditional commitment, not the final close of the loan. the loan did not close until september. additional takes place on the conditional commitment as is true in every transaction. >> what changed from january 9 and january 26 when they did not need that information? >> i do not know what the general 26 date is. >> is says they are under there. >> they said they did not do because they needed the information. >> we are approaching the beginning. >> the credit committee had their observations taken into account. >> this is the beginning of the

approval process. >> the credit committee does not match your? >-- master? >> they said they will meet in march. they did. >> the gentleman's time has expired. we're in the first round. >> i have a consent request. i am sitting here. i am seeing a wee bit of information carefully. it is supposed to tell me what happened here. pimm i do not think there are any lawyers that would tell your that it would be some fission. the whole document should be placed before us.

dig it out. let's see the whole thing. comments.ng a lot of saying this is terrible. i do not know what has happened. i do not see anything of their which tells me that we have a clear picture of the problems. require, let'sto inquire fairly. is it possible that my republican colleagues have seen these? >> we will take it under advisement. all the documents will be made available. i asked my cancel -- my counsel to provide these documents.

they have them produce. they have not been to you. is that a fear of session and it fair -- is that a fair assumption? we passed a unanimous. >> i want to know what they said. i wanted to be put in the record. >> if the gentlemen would yield. >> we recall that the documents were produced under an agreement with the majority that they were to be confidential and were not to be copied or in any way disseminated. what happened was in between yesterday when i found this out at about 7:00 p.m. last night and today, it turned out that the majority released the documents to the press.

i have just as much concern about this as everybody else. the way the information has been parceled out, the minority does not have the full copies of the e-mail. that is not in the grand tradition. >> we heard your opening statement. we made a unanimous consent. i am told you were given all these documents. this is the one that specified this. we have agreed that we will make them public. >> they were subpoenaed. they did not have the right to tell us. >> i understand that.

we agree that they cannot tell us. we will make this public. i appreciate your concern. is there any objection to allowing him in the first-round? >> i have no objection but i like to understand this. if we are blind to have a second -- if we're going to have a -- >> we have provided all the documents to you. they were produced to both sides. is a possible your staff has not made them available to you? >> i understand it is the committee staff to make these available to all members of the committee.

i understand the committee staff works for all of us. >> we were told we could look at the documents but we cannot copy them. the documents could not be disseminated in any way. that is a ridiculous agreement. if we questioned on documents, we have this available for everyone. what we have had today are the slides, taking " without providing them to anybody. >> i think the point is that they should have been made available so that they could go to the task. i think that -- >> if i could ask a question.

the e-mails that are in question are from department of energy staff. it doesn't already have access to all of that? >> i do not necessarily have access. >> we're not complaining about whether he has these e-mails are e.t here > this is a serious way to proceed. i will take your criticism under advisement. >> no. this is not compromis when you take it under advisement.

i do not believe this has been adequate answer for my concerns. and did not like the president. i will read about these things from the press. i do not like the fact that we're having all manner of inferences drawn. i am not comforted by these been taken under advisement. it should be a dress now. i expect -- i respect his opinion. we say we have given you all the documents. the fact that you do not have them in front of you is not your fault. >> are we majority or minority? the majority staff is making

this decision? they're going above their authorities. if the minority is, we have to find out why. >> i suggest you do that and we find out why. >> i find the business of the committee being conducted in a curious way. >> you do not recognize you have all the documents. my staff has provided all the documents to you. >> where are the documents tha? i am anxious to see them. >> i think what we're going to do is continue this discussion. i want to recognize the gentleman from kansas for five minutes. cried thank you.

about the fact the king to his office. he cannot understand why. nobody in that room had any skin in the game. this is exactly what we get when the federal government tries to put money into businesses. your task has occurred a subsidy. you're out there looking at everyone's loans. >> the point is to put a score. >> that is the purpose spa. i read about this and i was in law school. it was published. i know a fair amount about the process. what you're these cores that

were taking index for june watch for the scores that were taken? -- what were the scores in 2009 that for taken? >> it increased. >> can you provide to the committee the original score, and the subsequent scored? you will provide that information? >> we will work was that to make sure. >> then you give us the score in 2011. you decided this is how much additional subsidies to be provided. >> 2011 as part of the restructuring. this loan was in imminent default. irish gentry was in the best interest of taxpayers. -- our interest was in the best interests of the taxpayers.

it'll cost them less. the restructuring in the annual budget will be reflected. >> this is exactly what happens. let me go back. no one could have known what was going to happen to the price of the cells. this was unimaginable that the cells fis would fall below. do you agree? and who could have known? analysts were- many surprised. >> in august 2004 he wrote you

hear about company is working toward price disparity. the manufacturers will have another world. >> what is the status? >> does see have information? >> i don't. i have a reservation to a unanimous consent request. >> it will not be put in the record. >> i just want to know. are the e-mails and other things that i have been discussing, and will it be put in the record?

>> they are. >> i want to make sure everybody is creates a. i want to major in. >> i know you were not there at the time. were they aware of the concerns about the pricing of the cells software central? >> there are always there. it was the cost of ownership. there's the balance of systems payment. it is a very competitive opportunity. >> i understand. >> the city of gone from 135 to 180 folks. -- you said you have gone from

1352180 folks. i hope you hired mark. >> we have hired an enormous a large and talented pool of former private public experts and executives. i think we have built a very good one. >> the talked about this loss of market share. these't is precisely what programs are intended to do? the cost of production will come down. >> should the new be thrilled that the prices go down taxi a? yeah at sad. >> it is our collective efforts. we issued a different solar manufacturing loan guarantee to

a company whose improvement is a process improvements. it allows them to cut the costs by 500. the american taxpayers lost half a billion dollars. assigned to pick a particular business. isn't that precisely what happened here? >> we are putting together a portfolio. >> i have been here for the entire hearing. i have heard not a single person stand up and take any accountability for taxpayer money. when asked who is responsible. you point to other people. you take no accountability. for me this is unacceptable. i yield back. >> the witnesses have indicated

a request. we will come back at 1230. >> we appreciate your support. >> we will have the second round. how will us this friday, top executives are scheduled to be on capitol hill to testify to the same committee. tor